Wednesday, April 27, 2011

Stocks Surging into Final Hour on Less Fed Uncertainty, Short-Covering, Technical Buying, More Economic Optimism

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Most Sectors Rising
  • Volume: Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 15.49 -.83%
  • ISE Sentiment Index 140.0 +15.03%
  • Total Put/Call .92 +8.24%
  • NYSE Arms .93 -16.50%
Credit Investor Angst:
  • North American Investment Grade CDS Index 92.25 -.37%
  • European Financial Sector CDS Index 88.58 -1.28%
  • Western Europe Sovereign Debt CDS Index 193.92 +.67%
  • Emerging Market CDS Index 205.79 +.93%
  • 2-Year Swap Spread 15.0 -3 bps
  • TED Spread 22.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .05% unch.
  • Yield Curve 270.0 +1 bp
  • China Import Iron Ore Spot $179.50/Metric Tonne +.34%
  • Citi US Economic Surprise Index 11.70 -.4 point
  • 10-Year TIPS Spread 2.56% -1 bp
Overseas Futures:
  • Nikkei Futures: Indicating +54 open in Japan
  • DAX Futures: Indicating +43 open in Germany
  • Higher: On gains in my Medical, Retail, Biotech and Tech sector longs
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is bullish as the S&P 500 surges to a new multi-year high, despite US/European debt fears, emerging markets inflation worries, higher energy prices, more hawkish Fed commentary and Mideast unrest. On the positive side, Road & Rail, Education, Gaming, Retail, HMO, Hospital, Drug, Biotech, Medical, Bank, Wireless, Telecom, Computer Service and Internet shares are especially strong, rising more than +1.0%. Tech and Transport shares are outperforming. The Portugal sovereign cds is falling -2.45% to 664.54 bps and the Italy sovereign cds is declining -2.0% to 151.99 bps. The UBS-Bloomberg Spot Ag Index is falling -.96%. On the negative side, Construction, Disk Drive, Steel and Coal shares are under pressure, falling more than -.75%. Copper is declining -1.6%, oil is rising +.83% and lumber is falling another -2.21%. The US price for a gallon of gas is rising .01/gallon today to $3.88/gallon. It is up .76/gallon in 71 days. The Greece, Ireland and Portugal sovereign cds are still near or at record highs. The US dollar continues to trade very poorly, which remains a huge longer-term negative for the US economy and stocks. The Shanghai Composite, after opening higher, reversed and fell another -.49% last night, finishing near session lows. Brazil shares are also weak today with the Bovespa dropping -1.29%. The broad market continues to trade very well and further short-covering, after a brief pause, is likely. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less tech/financial sector pessimism, earnings optimism, buyout speculation, more economic optimism, investor performance angst, less fed uncertainty and technical buying.

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