Broad Market Tone: - Advance/Decline Line: Substantially Higher
- Sector Performance: Most Rising
- Volume: Below Average
- Market Leading Stocks: Performing In Line
Equity Investor Angst: - VIX 16.01 -2.02%
- ISE Sentiment Index 94.0 -42.33%
- Total Put/Call .81 -20.59%
- NYSE Arms .73 -36.92%
Credit Investor Angst:- North American Investment Grade CDS Index 91.0 -2.22%
- European Financial Sector CDS Index 121.50 -5.19%
- Western Europe Sovereign Debt CDS Index 245.67 +1.73%
- Emerging Market CDS Index 206.09 -1.44%
- 2-Year Swap Spread 24.0 -1 bp
- TED Spread 23.0 -1 bp
Economic Gauges:- 3-Month T-Bill Yield .02% +2 bps
- Yield Curve 267.0 unch.
- China Import Iron Ore Spot $170.70/Metric Tonne +1.19%
- Citi US Economic Surprise Index -73.70 +7.6 points
- 10-Year TIPS Spread 2.38% +4 bps
Overseas Futures: - Nikkei Futures: Indicating +140 open in Japan
- DAX Futures: Indicating +49 open in Germany
Portfolio:
- Higher: On gains in my Retail, Medical, Biotech and Technology longs
- Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and then added them back
- Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 builds on recent gains despite being technically overbought, emerging markets inflation fears, rising eurozone debt angst, increasing food/energy prices and global growth concerns. On the positive side, Coal, Steel, Internet, Software, Semi, Disk Drive, Networking, Bank, Construction, Homebuilding, Retail, Gaming and Education shares are especially strong, rising more than +2.0%. Small-Caps and cyclicals are outperforming again. Tech shares have traded well throughout the day. Growth stock leaders continue to strongly outperform. (XLF) is also outperforming and the Transports are making a record high. Copper is jumping +2.35% and Lumber is rising +2.28%. The Belgium sovereign cds is down -2.99% to 162.33 bps. On the negative side, Computer Service, HMO, Restaurant, Telecom and Drug shares are either flat or lower on the day.
Oil is rising +2.0%, the UBS-Bloomberg Ag Spot Index is up +2.2% and Rice is up +3.2%. Rice futures are up +21.0% in 5 days. The US price for a gallon of gas is +.01/gallon today to $3.58/gallon. It is up .44/gallon in less than 5 months. The Spain sovereign cds is up +2.6% to 301.73 bps, the Ireland sovereign cds is gaining +2.15% to 855.65 bps and the Portugal sovereign cds is up +7.35% to 984.07 bps. The Portugal and Ireland sovereign cds are hitting new record highs. European contagion fears continue to intensify, which is a major negative. The Shanghai Composite fell -.6% overnight, finishing at session lows. Brazil's Bovespa continues to trade very poorly, falling another -.52% today, and is now down -10.2% ytd. Moreover, Italian and Spanish stocks gave up their nice gains after US economic data and finished at session lows in slightly negative territory. The AAII % Bulls rose to 41.77 this week, while the % Bears fell to 24.68, which is a large negative. Investor bullishness has moved from low levels to high levels in a very short period of time, especially given the extent of the still developing headwinds. The odds are increasing for another stock pullback, unless the situation in Europe improves meaningfully very soon. I expect US stocks to trade mixed-to-lower from current levels into the close on rising eurozone debt angst, emerging markets inflation fears, rising food/energy prices, profit-taking and more shorting.
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