Monday, April 04, 2011

Stocks Slightly Lower into Final Hour on Rising Food/Energy Prices, Mideast Unrest, Tech Sector Concerns, Profit-Taking

Broad Market Tone:

  • Advance/Decline Line: About Even
  • Sector Performance: Most Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 17.78 +2.18%
  • ISE Sentiment Index 102.0 unch.
  • Total Put/Call 1.02 +15.91%
  • NYSE Arms 1.19 +48.03%
Credit Investor Angst:
  • North American Investment Grade CDS Index 93.24 -1.03%
  • European Financial Sector CDS Index 94.72 +7.13%
  • Western Europe Sovereign Debt CDS Index 165.17 bps -.70%
  • Emerging Market CDS Index 198.25 -1.11%
  • 2-Year Swap Spread 18.0 unch.
  • TED Spread 26.0 +2 bps
Economic Gauges:
  • 3-Month T-Bill Yield .04% -2 bps
  • Yield Curve 266.0 +1 bp
  • China Import Iron Ore Spot $173.90/Metric Tonne unch.
  • Citi US Economic Surprise Index +41.10 -8.4 points
  • 10-Year TIPS Spread 2.55% +3 bps
Overseas Futures:
  • Nikkei Futures: Indicating +30 open in Japan
  • DAX Futures: Indicating +16 open in Germany
  • Slightly Lower: On losses in my Tech sector longs
  • Disclosed Trades: None
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is mildly busllish as the S&P 500 consolidates recent gains, despite Mideast unrest, rising energy/food prices, tech sector worries, emerging market inflation fears and Japan concerns. On the positive side, Drug, Steel and Ag shares are especially strong, rising .75%+. The Italy sovereign cds is falling -3.67% to 139.30 bps, the Ireland sovereign cds is declining -3.7% to 602.12 bps, the Japan sovereign cds is falling -5.24% to 92.17 bps, the US sovereign cds is falling -6.11% to 39.50 bps and the Saudi sovereign cds is declining -3.7% to 114.0 bps. On the negative side, Education, Homebuilding, I-Banking, Wireless, Networking, Disk Drive, Semi, Computer, Oil Tanker and Defense shares are under pressure, falling more than -.75%. Tech shares have underperformed throughout the day again. (XLF) is also relatively weak again. Oil is rising +.3%, copper is falling -.18%, gold is rising +.42% and the UBS-Bloomberg Spot Ag Index is gaining another +1.18%. The UBS-Bloomberg Spot Ag Index looks poised to test its record highs over the coming weeks, which would again raise emerging market inflation worries. Chinese pork prices are up 41% over the last 10 months. The US price for a gallon of gas is up +.04 today to $3.66/gallon. It is up .54/gallon in 48 days. The Spain sovereign cds is rising +3.09% to 224.80 bps, the Portugal sovereign cds is gaining +1.57% to 578.33 bps and the US Muni CDS Index is gaining +1.85% to 153.47 bps. Action in copper, bonds and t-bills is a concern again today. The TED spread has broken out of an eight-month range. With the DJIA back to multi-year highs, the tech and financial sectors must join in soon for the recent rally to gain much traction from current levels, in my opinion. Both sectors remain below their 50-day moving averages. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting, profit-taking, technical selling, tech sector weakness, emerging market inflation fears, rising energy/food prices, Mideast unrest and Japan concerns.

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