Friday, November 04, 2011

Stocks Declining into Final Hour on Rising Eurozone Debt Angst, Financial Sector Pessimism, Global Growth Fears, Profit-Taking


Broad Market Tone:

  • Advance/Decline Line: Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Around Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 30.48 -.07%
  • ISE Sentiment Index 97.0 -7.62%
  • Total Put/Call 1.15 +7.48%
  • NYSE Arms 1.10 +81.62%
Credit Investor Angst:
  • North American Investment Grade CDS Index 123.20 +.51%
  • European Financial Sector CDS Index 228.46 +2.05%
  • Western Europe Sovereign Debt CDS Index 334.33 +.47%
  • Emerging Market CDS Index 282.02 +2.50%
  • 2-Year Swap Spread 36.0 +2.0 bps
  • TED Spread 44.0 +1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .00% unch.
  • Yield Curve 181.0 -2 bps
  • China Import Iron Ore Spot $122.90/Metric Tonne +.16%
  • Citi US Economic Surprise Index 18.70 +5.1 points
  • 10-Year TIPS Spread 2.12 +3 bps
Overseas Futures:
  • Nikkei Futures: Indicating -81 open in Japan
  • DAX Futures: Indicating +19 open in Germany
Portfolio:
  • Slightly Higher: On gains in my Tech/Retail sector longs, Index hedges and Emerging Markets shorts
  • Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added some back
  • Market Exposure: 75% Net Long
BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 trades lower on rising Eurozone debt angst, rising global growth worries, financial sector pessimism and rising energy prices. On the positive side, Coal, Alt Energy, Steel, Computer, Semi, Disk Drive, HMO and Restaurant shares are higher on the day. Tech shares have outperformed throughout the day. Gold is falling -.4% and Lumber is rising +.4%. Major Asian equity indices rose 1-3% overnight. The China sovereign cds is falling -10.95% to 135.89 bps, the Japan sovereign cds is falling -5.2% to 110.12 bps and the Saudi sovereign cds is falling -3.0% to 110.0 bps. On the negative side, Networking, Bank, I-Banking, REIT, Construction, Insurance and Biotech shares are under pressure, falling more than -1.5%. (XLF) has traded poorly throughout the day. Oil is rising +.3%, copper is falling -.67% and the UBS-Bloomberg Ag Spot Index is flat. Major European equity indices fell 2.0-2.5% today. The Spain sovereign cds is jumping +4.65% to 388.33 bps, the Italy sovereign cds is rising +1.77% to 496.67 bps, the Portugal sovereign cds is rising +3.3% to 1,038.0 bps, the Belgium sovereign cds is gaining +2.04% to 282.0 bps, the Russia sovereign cds is climbing +2.26% to 211.33 bps and the Ireland sovereign cds is rising +2.42% to 719.33 bps. Rice is still close to its multi-year high, rising +26.8% in about 4 months. The Italian 10-year yield jumped +17 bps to 6.37% today. The Italian/German 10-Year Yield Spread is soaring +26.47 bps to 454.64 bps, which is another new all-time high. The TED spread continues to trend higher and is near the highest since June 2010. The Libor-OIS spread is still very near the widest since July 2010. The 2-Year Euro Swap spread is still very near cycle highs, which is also noteworthy considering the recent strong equity advance. China Iron Ore Spot has plunged -35.90% since February 16th and -32.0% since Sept. 7th. Despite this week's pullback, the broad US equity market still trades like it wants to move higher in the short-term on fund year-end performance-chasing, seasonality and better US economic data. However, the rapidly deteriorating fundamentals in Europe continue to get in the way. I still suspect one more meaningful push higher can occur before year-end, but that it will prove to be short-lived. I expect US stocks to trade mixed-to-lower into the close from current levels on rising financial sector pessimism, global growth fears, rising Eurozone debt angst, profit-taking, more shorting and technical selling.

1 comment:

Jacoblrishly said...

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