Tuesday, June 07, 2011

Stocks Rising Slightly into Final Hour on Bargain-Hunting, Euro Bounce, Short-Covering

Broad Market Tone:

  • Advance/Decline Line: Higher
  • Sector Performance: Almost Every Sector Rising
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 17.63 -4.76%
  • ISE Sentiment Index 136.0 +47.83%
  • Total Put/Call 1.12 +1.75%
  • NYSE Arms .99 -70.57%
Credit Investor Angst:
  • North American Investment Grade CDS Index 95.54 +1.35%
  • European Financial Sector CDS Index 105.92 -2.13%
  • Western Europe Sovereign Debt CDS Index 187.92 -.35%
  • Emerging Market CDS Index 215.57 -2.47%
  • 2-Year Swap Spread 20.0 unch.
  • TED Spread 22.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .03% +1 bp
  • Yield Curve 259.0 +2 bp
  • China Import Iron Ore Spot $170.70/Metric Tonne +.29%
  • Citi US Economic Surprise Index -109.90 +2.8 points
  • 10-Year TIPS Spread 2.23% unch.
Overseas Futures:
  • Nikkei Futures: Indicating +7 open in Japan
  • DAX Futures: Indicating +7 open in Germany
  • Slightly Higher: On gains in my Retail, Medical and Biotech sector longs
  • Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and then added them back, added slightly to my (SODA) long
  • Market Exposure: 50% Net Long
BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, eurozone debt angst and rising food/energy prices. On the positive side, REIT, Biotech, Medical Equipment and Semi shares are especially strong, rising more than +1.0%. Small-Cap and Cyclical shares are outperforming. (IYR) has traded well throughout the day. Copper is rising +.22% and Lumber is up +1.8%. The Russia sovereign cds is falling -1.75% to 132.64 bps and the Saudi sovereign cds is falling -2.18% to 94.31 bps. Weekly retail sales rose +4.3% this week versus a +3.9% gain the prior week and down from a +5.1% increase the first week of May. On the negative side, Computer, Disk Drive, Hospital, Gaming, Education and Software shares are down on the day. Oil is rising +.6% and the UBS-Bloomberg Ag Spot Index is gaining +.4%. The US price for a gallon of gas is down -.01/gallon today to $3.76/gallon. It is up .62/gallon in less than 4 months. The Spain sovereign cds is rising +.77% to 241.88 bps, the Portugal sovereign cds is rising +.74% to 678.92 bps, the Greece sovereign cds is rising +.44% to 1,402.06 bps and the US Muni CDS Index is gaining +2.87% to 131.17 bps. Overall, today's stock bounce is of low quality, considering recent losses. I still suspect a test of DJIA 12,000 is likely over the coming days. One of my longs, (SODA), is making another new high today on volume. I still see substantial upside to these shares over the longer-term. I expect US stocks to trade modestly lower into the close from current levels on global growth worries, rising eurozone debt concerns, emerging markets inflation fears, rising Mideast unrest, rising food/energy prices, technical selling and more shorting.

1 comment:

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