Friday, June 10, 2011

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, Emerging Markets Inflation Fears, Technical Selling

Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Almost Every Sector Declining
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 18.08 +1.80%
  • ISE Sentiment Index 117.0 +13.59%
  • Total Put/Call 1.20 +13.12%
  • NYSE Arms 1.11 +95.04%
Credit Investor Angst:
  • North American Investment Grade CDS Index 98.80 +.48%
  • European Financial Sector CDS Index 116.31 +3.24%
  • Western Europe Sovereign Debt CDS Index 207.0 +5.0%
  • Emerging Market CDS Index 222.13 +2.29%
  • 2-Year Swap Spread 19.0 unch.
  • TED Spread 21.0 unch.
Economic Gauges:
  • 3-Month T-Bill Yield .03% unch.
  • Yield Curve 257.0 unch.
  • China Import Iron Ore Spot $173.10/Metric Tonne +.29%
  • Citi US Economic Surprise Index -97.80 +.4 point
  • 10-Year TIPS Spread 2.17% -4 bps
Overseas Futures:
  • Nikkei Futures: Indicating -44 open in Japan
  • DAX Futures: Indicating +9 open in Germany
  • Slightly Lower: On losses in my Biotech, Medical and Tech sector longs
  • Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
  • Market Exposure: Moved to 50% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades lower on global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, rising eurozone debt angst and rising food prices. On the positive side, Bank shares are higher on the day. (XLF) has rebounded back to the flat line. Oil is falling -2.4% and gold is down -.85%. On the negative side, Education, REIT, HMO, Oil Service, Coal, Energy, Networking, Wireless, Medical, Drug and Construction shares are especially weak, falling more than -1.75%. Cyclicals are underperforming. (IYR) has been heavy throughout the day again. The UBS-Bloomberg Ag Spot Index is gaining +.2% and Lumber is dropping -3.7%. Lumber has plunged -30.0% in 2 1/2 months. The US price for a gallon of gas is down -.01/gallon today to $3.72/gallon. It is up .58/gallon in less than 4 months. The Spain sovereign cds is gaining +5.6% to 273.20 bps, the Italy sovereign cds is climbing +6.41% to 171.67 bps, the Portugal sovereign cds is gaining +2.23% to 736.20 bps, the Greece sovereign cds is surging +2.63% to 1,561.18 bps, the Ireland sovereign cds is up +2.21% to 706.08 bps, the Belgium sovereign cds is rising +2.83% to 149.67 bps, the Russia sovereign cds is gaining +3.33% to 142.68 bps and the UK sovereign cds is rising +2.97% to 63.67 bps. The Spain sovereign cds is close to a technical breakout. Moreover, the Portugal sovereign, Ireland sovereign and Greece sovereign cds are hitting new record highs again today. The Citi Latin America Economic Surprise Index is dropping -7.0 points today to -40.50, which is the lowest level since May 18th, 2009. Italian and French shares continue to display poor technicals. Spain's IBEX 35 is breaking down technically today. The FTSE 100 broke below its 200-day moving average today, as well. None of the fundamentals that have been weighing on equities are showing any improvements yet. This situation in Europe is deteriorating rapidly and the authorities are likely to come up with a solution soon that kicks the can down the road, but that will temporarily boost equities. I expect US stocks to trade mixed-to-lower into the close from current levels on global growth worries, rising eurozone debt concerns, emerging markets inflation fears, rising Mideast unrest, technical selling, rising food prices and more shorting.

1 comment:

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