Wednesday, April 13, 2011

Stocks Slightly Higher into Final Hour on Less Tech Sector Pessimism, Short-Covering, Bargain-Hunting, Lower Long-Term Rates

Broad Market Tone:

  • Advance/Decline Line: Slightly Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Slightly Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 16.64 -2.63%
  • ISE Sentiment Index 126.0 +.80%
  • Total Put/Call .81 -28.32%
  • NYSE Arms 1.12 +61.24%
Credit Investor Angst:
  • North American Investment Grade CDS Index 94.74 -.80%
  • European Financial Sector CDS Index 94.06 +12.20%
  • Western Europe Sovereign Debt CDS Index 165.75 bps +2.10%
  • Emerging Market CDS Index 197.66 +.30%
  • 2-Year Swap Spread 16.0 -1 bp
  • TED Spread 23.0 -1bp
Economic Gauges:
  • 3-Month T-Bill Yield .05% +1 bp
  • Yield Curve 273.0 -2 bps
  • China Import Iron Ore Spot $181.90/Metric Tonne unch.
  • Citi US Economic Surprise Index +29.60 +1.1 points
  • 10-Year TIPS Spread 2.62% -1 bp
Overseas Futures:
  • Nikkei Futures: Indicating -16 open in Japan
  • DAX Futures: Indicating +23 open in Germany
  • Higher: On gains in my Medical, Tech and Biotech sector longs
  • Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and then added them back
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite rising energy prices, emerging market inflation fears, financial sector weakness and rising eurozone debt angst. On the positive side, Gaming, Networking, Disk Drive, Computer, Software and Coal shares are especially strong, rising more than 1.0%. Tech shares have outperformed throughout the day and leadership is improving in the sector. Lumber is rebounding +3.76%. The Japan sovereign cds is falling -3.44% to 85.18 bps. On the negative side, Oil Tanker, Defense, Steel, Telecom, Bank, I-Banking, Insurance, Homebuilding, Education and Airline shares are lower on the day. (XLF) has been heavy throughout the day. The Transports are also relatively weak. Copper is falling another -1.88% and oil is rising +1.09%. The US price for a gallon of gas is up +.02 today to $3.81/gallon. It is up .69/gallon in 57 days. Despite near-record gas prices, refinery utilization plunged 3.0% this week to 81.4% which is a very depressed level. The Gasoline Crack Spread is currently 29.05, the highest level since May 2007. The 10-year TIPS spread is maintaining recent gains. The Bloomberg Autos Anchored Index continues to surge, rising another +4.8% today, and is now at the highest level since August 2009. The US dollar continues to trade very poorly, notwithstanding today's mild bounce. The Spain sovereign cds is rising +4.39% to 220.25 bps, the Portugal sovereign cds is gaining +2.68% to 574.82 bps, the Italy sovereign cds is gaining +3.37% to 135.10 bps, the Belgium sovereign cds is jumping +2.63% to 127.12 bps, the UK sovereign cds is gaining +2.11% to 53.33 bps and the Greece sovereign cds is surging +4.02% to 1,104.53 bps. The Greece sovereign cds is now at a new record high. Energy/Foods prices have not declined nearly enough yet to help sustain a strong broad equity market advance from current levels. Tomorrow's March PPI will likely exceed estimates of +1.0%, which could pressure equities in the morning. One of my longs, (AAPL), is trading much better the last 2 days despite some negative analyst commentary regarding their forward guidance during the upcoming earnings call. I still see significant upside in the shares from current levels over the longer-term. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, Mideast unrest, rising eurozone debt angst, rising energy prices, emerging markets inflation fears, profit-taking and Japan concerns.

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