Wednesday, June 22, 2011

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, US Debt Ceiling Concerns, Rising Energy Prices

Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • VIX 18.19 -3.55%
  • ISE Sentiment Index 140.0 +12.90%
  • Total Put/Call .84 -11.58%
  • NYSE Arms 1.17 +64.83%
Credit Investor Angst:
  • North American Investment Grade CDS Index 97.09 +1.10%
  • European Financial Sector CDS Index 115.17 +6.61%
  • Western Europe Sovereign Debt CDS Index 220.33 +.15%
  • Emerging Market CDS Index 225.86 +.32%
  • 2-Year Swap Spread 26.0 unch.
  • TED Spread 23.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .01% -1 bp
  • Yield Curve 262.0 +2 bps
  • China Import Iron Ore Spot $171.90/Metric Tonne unch.
  • Citi US Economic Surprise Index -98.50 +.2 point
  • 10-Year TIPS Spread 2.17% -3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -30 open in Japan
  • DAX Futures: Indicating +15 open in Germany
  • Slightly Lower: On losses in my Retail and Tech longs
  • Disclosed Trades: Added (IWWM)/(QQQ) hedges, added to my (EEM) short
  • Market Exposure: Moved to 75% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades to session lows on rising eurozone debt angst, global growth concerns, emerging market inflation fears, the US debt ceiling worries and higher energy prices. On the positive side, Paper, Oil Service, Alt Energy and Coal shares are especially strong, rising more than +.5%. The Transports are outperforming again as they test their 50-day moving average. The UBS-Bloomberg Ag Spot Index is dropping -1.85% and Lumber is rising +1.55%. On the negative side, Internet, Hospital, Retail, Education, Airline and Tobacco shares are under mild pressure, falling more than -.75%. Oil is rising +1.21% and copper is dropping -.51%. The US price for a gallon of gas is -.01/gallon today to $3.63/gallon. It is up .49/gallon in less than 4 months. The Spain sovereign cds is jumping +8.02%, the Italy sovereign cds is climbing +6.43%, the Belgium sovereign cds is rising +5.35%, the UK sovereign cds is rising +4.18% to 65.42 bps, the Ireland sovereign cds is rising +4.2% to 762.03 bps and the Portugal sovereign cds is gaining +4.4% to 785.33 bps. Moreover, the Asia Pacific Sovereign CDS Index is jumping +4.42% to 123.66 bps and the Eurzone Investment Grade CDS Index is rising +3.0% to 80.08 bps. The large gain in the Eurozone Financial Sector CDS Index is also a large negative. India's Sensex continues to trade very poorly, as it is unable to even bounce off recent lows, and is still down -14.4% ytd. As well, the Shanghai Composite continues to trade poorly, only rising +.11% overnight, and is still down -5.65% ytd. The rise in European cds and euro currency weakness after yesterday's Greek vote is weighing on the market today. As well, it appears as though Congress is moving further apart on a US debt ceiling compromise. I expect US stocks to trade modestly lower into the close from current levels on rising eurozone debt angst, US debt ceiling worries, rising energy prices, emerging markets inflation fears and global growth worries.

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