Broad Market Tone: - Advance/Decline Line: Substantially Lower
- Sector Performance: Almost Every Sector Declining
- Volume: Below Average
- Market Leading Stocks: Outperforming
Equity Investor Angst: - VIX 21.46 +9.88%
- ISE Sentiment Index 102.0 +67.21%
- Total Put/Call .93 -13.89%
- NYSE Arms 1.78 +44.78%
Credit Investor Angst:- North American Investment Grade CDS Index 99.25 +2.24%
- European Financial Sector CDS Index 174.05 +10.31%
- Western Europe Sovereign Debt CDS Index 302.17 +3.78%
- Emerging Market CDS Index 226.07 +2.29%
- 2-Year Swap Spread 29.0 +1 bp
- TED Spread 21.0 +1 bp
Economic Gauges:- 3-Month T-Bill Yield .00% unch.
- Yield Curve 255.0 unch.
- China Import Iron Ore Spot $174.40/Metric Tonne -.11%
- Citi US Economic Surprise Index -98.0 +1.9 points
- 10-Year TIPS Spread 2.33% +4 bps
Overseas Futures: - Nikkei Futures: Indicating -105 open in Japan
- DAX Futures: Indicating +40 open in Germany
Portfolio:
- Slightly Lower: On losses in my Tech, Biotech and Retail sector longs
- Disclosed Trades: Added to my (IWM)/(QQQ) hedges and then covered them
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bearish as the S&P 500 breaks convincingly below its 50-day moving average on soaring eurozone debt angst, US debt ceiling concerns, emerging markets inflation fears, global growth worries and financial sector pessimism. On the positive side, Coal, Restaurant, Education and Computer Service shares are holding up well. "Growth" stocks are outperforming "value" again. Oil is falling -1.5% and the UBS-Bloomberg Ag Spot Index is down -.5%. On the negative side, Airline, Gaming, Homebuilding, Insurance, Bank, Networking, Paper, Steel, Oil Tanker and Alt Energy shares are especially weak today, falling more than -2.0%.
Small-cap and cyclicals are underperforming. (XLF) has traded poorly again throughout the day. The Transports, which had been leading the market, are heavy again today. Gold is up +.75%. Rice is hovering near a multi-year high and has soared almost +30.0% in about 2 weeks. The US price for a gallon of gas is +.01/gallon today to $3.68/gallon. It is up .54/gallon in less than 5 months. The Spain sovereign cds is up +9.86% to 380.11 bps, the Italy sovereign cds is jumping +6.32% to 321.11 bps, the France sovereign cds is surging +9.77% to 123.32 bps, the Germany sovereign cds is jumping +8.9% to 63.77 bps, the Greece sovereign cds is rising +1.9% to 2,475.0 bps, the Belgium sovereign cds is gaining +7.4% to 216.31 bps, the Portugal sovereign cds is up +5.3% to 1,204.60 bps and the Ireland sovereign cds is up +5.4% to 1,190.15 bps. The Germany sovereign cds is breaking out technically and is at the highest level since March 2009. The Western Europe Sovereign CDS Index is making another record high and the European Financial Sector CDS Index is near its recent high. The Ireland, France, Greece and Portugal sovereign cds are making a new record highs today, as well. The China Development Bank(which lends heavily to local governments) cds is rising +4.0 bps to 177.0 today, which is the highest since May 2009. Shanghai copper inventories have risen +45.0% in 5 days. Brazil's Bovespa fell another -1.03% today to the lowest since May 2010 and is down -15.1% ytd. Italian equities fell another -3.1%, finishing at session lows, and are down -11.3% ytd. As well Spanish shares fell another -1.44% and French shares fell another -2.04%, both finishing near session lows. I continue to believe US debt ceiling concerns are masking underlying euro currency weakness. Many true "growth" stocks continue to massively outperform the broad market. If the eurozone debt situation continues to spin out of control through week's end, another imminent test of the S&P 500's 200-day moving average is likely. I expect US stocks to trade mixed-to-high into the close from current levels on a bounce off the lows in the euro, bargain-hunting, short-covering and growth stock strength.
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