Monday, January 14, 2013

Stocks Slightly Lower into Final Hour on Rising Debt Ceiling Concerns, Eurozone Debt Angst, Profit-Taking, Consumer Discretionary/Financial Sector Weakness

Today's Market Take:

Broad Market Tone:
  • Advance/Decline Line: Modestly Lower
  • Sector Performance: Mixed
  • Volume: Below Average
  • Market Leading Stocks: Underperforming
Equity Investor Angst:
  • VIX 13.49 +.97%
  • ISE Sentiment Index 98.0 -7.55%
  • Total Put/Call .80 +12.68%
  • NYSE Arms 1.05 -27.29%
Credit Investor Angst:
  • North American Investment Grade CDS Index 89.16 +2.25%
  • European Financial Sector CDS Index 131.58 +3.15%
  • Western Europe Sovereign Debt CDS Index 98.90 +1.0%
  • Emerging Market CDS Index 215.81 +.14%
  • 2-Year Swap Spread 13.25 -.5 bp
  • TED Spread 23.75 unch.
  • 3-Month EUR/USD Cross-Currency Basis Swap -17.025 -.25 bp
Economic Gauges:
  • 3-Month T-Bill Yield .06% unch.
  • Yield Curve 1612.0 +1 bp
  • China Import Iron Ore Spot $154.60/Metric Tonne -.19%
  • Citi US Economic Surprise Index 8.90 -2.0 points
  • 10-Year TIPS Spread 2.53 +2 bps
Overseas Futures:
  • Nikkei Futures: Indicating +209 open in Japan
  • DAX Futures: Indicating +9 open in Germany
Portfolio:
  • Slightly Lower: On losses in my tech sector longs and emerging markets shorts
  • Disclosed Trades: None

  • Market Exposure: 25% Net Long

1 comment:

theyenguy said...

The National Bank of Greece, NBG, and Greece, GREK, traded lower, as the Euro, FXE, traded lower, while Turkey, TUR, and New Zealand, ENZL, traded higher.

A number of the World’s Banks traded to new rally highs, including BSMX, LYG, RBS, BAP,
CIB, CS, SAN, IRE, which took European Financials, EUFN, to a new spinning top rally high.

Solar Stocks, KWT, traded lower.

Inverse Volatility, ZIV, traded to a new rally high.

Zero Hedge reports Hedge funds most levered and long since 2004. Yet, I believe that World Stocks, VT, World Stock Markets, EFA, have topped out on the topping out of Major World Currencies, DBV, and Emerging Market Currencies, CEW, and that these will be falling lower on the exhaustion of the world central banks’ monetary authority, as bond vigilantes, have called the Interest Rate on the US Ten Year Note, ^TNX, higher from 1.70%, as well have induced the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, higher, as reflected in a steepening of the Steepner, STPP.

Mortgage Backed Bonds, MBB, have turned lower from their September 2012 highs reflecting a growing aversion to real estate investing, and a growing risk aversion the implied underwriting of Freddie Mac and Fannie Mae by the US Congress. Mortgage REITS, REM, saw a sharp sell off in November only to participate in a risk-on recovery with a blow off top in the US Stock Market, VTI, and the World Stock Market, ACWI. Total Bonds, BND, have turned lower on lower US Government Debt, especially lower 30 Year US Government Bonds, EDV, and lower 10 Year US Notes, TLT. The monetization of debt by the US Federal Reserve has caused debt deflation in Aggregate Credit, AGG. Overall US Treasury Bonds, GOVT, are trading at the edge of a massive head and shoulders chart pattern, which will in time progress to a turn lower in all US Debt. Interest Rates on Sovereign Debt are rising globally and World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, traded lower in January 2013, as did Municipal Bonds, MUB. The only debt that has risen is the most toxic of debt, Distressed Investments, FAGIX, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Call Write Bonds, CWB, and Junk Bonds, JNK.

I believe that the monthly chart of World Stocks, ACWI, shows an Elliott Wave 2 of 2 High in December 2012, at 48.08. And the monthly chart of S&P 500, traded by SPY, made an Elliott Wave 5 High in September 2012, at 142.96.

Therefore I see short selling opportunities in the following:
.. Sector ETFs .. such as PSP, IBB, RZV, FAA, CARZ, BJK, KWT, FXR, TAO, DRW, XRT, COPX, VIG, WOOD, ROOF, IGN, ITB, FEMS, SEA, FAN, REM, JJT, PXR, FLM, ICLN, AUSE, XPH, EWX, SOIL, ZIV
.. Country ETFs .. such as EPHE, EPOL, EWW, THD, TUR, ECNS, EWO, ENZL VNM, EWZS, GREK, URTY, EWY, EWX, ARGT, EIRL, EWP
.. and Banks .. such as BAC, C, BCS, LYG, RBS, SAN,DB, IBN, HDB, NMR, MTU, UBS, WF, CS, GGAL, BFR, BMA, BPOP, IRE, CHIX, SMFG, MFG, BSMX, IRE

I see opportunities in going long in the following:
.. Proshares 200% Inverse ETFs .. such as BIS, FXP, SQQQ, SMK, SDD, EEV, EFU,
.. Direxion 300% Inverse ETFs .. such as EDZ, YANG, RUSS, DPK
.. Metal Based ETFS .. such as FSG, UGL, AGQ, NUGT.

These financial instruments can be viewed on my public chart site http://stockcharts.com/public/1270699