Wednesday, June 29, 2022

Stocks Slightly Higher into Final Hour on Lower Long-Term Rates, End-of-Quarter Window Dressing, Technical Buying, Medical/Restaurant Sector Strength

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance:  Most Sectors Declining
  • Volume:  Below Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 28.5 +.6%
  • DJIA Intraday % Swing .84% -66.3%
  • Bloomberg Global Risk On/Risk Off Index 4,622.0 -269.0 points
  • Euro/Yen Carry Return Index 146.67 -.47%
  • Emerging Markets Currency Volatility(VXY) 11.7 unch.
  • CBOE S&P 500 Implied Correlation Index 48.1 +.6% 
  • ISE Sentiment Index 142.0 +54.0 points
  • Total Put/Call 1.07 +7.0%
  • NYSE Arms 1.9 +41.2%
Credit Investor Angst:
  • North American Investment Grade CDS Index 99.93 +1.1%
  • US Energy High-Yield OAS 491.46 +4.0%
  • Bloomberg TRACE # Distressed Bonds Traded 421.0 +37.0
  • European Financial Sector CDS Index 127.57 +2.0%
  • Italian/German 10Y Yld Spread 188.0 basis points -5.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 135.23 +4.1%
  • Emerging Market CDS Index 338.28 +.48%
  • China Corp. High-Yield Bond USD ETF(KHYB) 27.42 +.26%
  • Ukraine Sovereign Debt Credit Default Swap 9,453.53 +9.1%
  • 2-Year Swap Spread 34.25 basis points +.75 basis point
  • TED Spread 49.25 basis points -1.0 basis point
  • 3-Month EUR/USD Cross-Currency Basis Swap -25.5 basis points -2.5 basis points
  • MBS  5/10 Treasury Spread  137.0 -2.0 basis points
  • iShares CMBS ETF 47.67 -.06%
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 50.93 -.05%
  • 3-Month T-Bill Yield 1.72% +1.0 basis point
  • Yield Curve 3.25 basis points (2s/10s) -4.25 basis points
  • China Iron Ore Spot 123.45 USD/Metric Tonne -.2%
  • Citi US Economic Surprise Index -68.3 +.6 point
  • Citi Eurozone Economic Surprise Index -16.9 +11.1 points
  • Citi Emerging Markets Economic Surprise Index 22.8 -.7 point
  • 10-Year TIPS Spread 2.39 -10.0 basis points
  • Highest target rate probability for September 21st FOMC meeting: 66.2%(+1.3 percentage points) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 48.0%(+.2 percentage point) chance of 3.25%-3.5%.
US Covid-19:
  • 236 new infections/100K people(last 7 days total). 14.0%(-1.0 percentage point) of 1/14 peak -14/100K people from prior report.
  • New Covid-19 patient hospital admissions per 100K population -77.2%(+.6 percentage point) from peak 7-day avg. of 1/9/21 - 1/15/22
Overseas Futures:
  • Nikkei 225 Futures: Indicating -30 open in Japan 
  • China A50 Futures: Indicating -111 open in China
  • DAX Futures: Indicating -10 open in Germany
Portfolio:
  • Slightly Higher:  On gains in my in my medical sector longs, index hedges and emerging market shorts
  • Disclosed Trades:  Covered some my (IWM)/(QQQ) hedges
  • Market Exposure:  Moved to 50% Net Long

Tuesday, June 28, 2022

Wednesday Watch

Evening Headlines

Bloomberg:           
Wall Street Journal:
Fox News:
Zero Hedge:
Newsmax:  
TheGatewayPundit.com: 
 The Epoch Times:
OpenVAERS:
SKirsch.com:
Night Trading 
  • Asian equity indices are -1.25% to -.5% on average.
  • Asia Ex-Japan Investment Grade CDS Index 131.5 +3.25 basis points. 
  • China Sovereign CDS 82.25 +4.75 basis points.
  • Bloomberg Emerging Markets Currency Index 50.99 +.08%.  
  • Bloomberg Global Risk-On/Risk Off Index 4,934.0 +36.0 points.
  • Volatility Index(VIX) futures 28.5 +.6%.
  • Euro Stoxx 50 futures n/a.
  • S&P 500 futures +.09%.
  • NASDAQ 100 futures +.09%. 
Morning Preview Links

Earnings of Note 
Company/Estimate 
 
Before the Open: 
  • (BBBY)/-1.39
  • (GIS)/1.01
  • (MKC)/.65
  • (PDCO)/.56
  • (PAYX)/.79
  • (SCHN)/2.30
After the Close:
  • (FIZZ)/.43
Economic Releases
10:30 am EST
  • Weekly DOE energy report.
Upcoming Splits
  • (SHOP) 10-for-1
Other Potential Market Movers
  • The Fed's Powell speaking, Fed's Mester speaking, Australia retail sales report, weekly MBA Mortgage Applications report, (HAE) investor day, (PFGC) investor day, (BBY) investor day and the (FDX) analyst meeting could also impact global trading today.
US Equity Market Hours
  • 9:30 am - 4:00 pm EST
BOTTOM LINE: Asian indices are modestly lower, weighed down by technology and consumer shares in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Reversing Sharply Lower into Final Hour on US Policy-Induced Stagflation Fears, European/Emerging Markets/US High Yld Debt Angst, Earnings Outlook Worries, Tech/Consumer Discretionary Sector Weakness

Broad Equity Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance:  Almost Every Sector Declining
  • Volume:  Around Average
  • Market Leading Stocks: Performing In Line
Equity Investor Angst:
  • Volatility(VIX) 28.0 +4.0%
  • DJIA Intraday % Swing 2.47% +264.2%
  • Bloomberg Global Risk On/Risk Off Index 4,947.0 +25.0 points
  • Euro/Yen Carry Return Index 147.50 +.02%
  • Emerging Markets Currency Volatility(VXY) 11.7 -.7%
  • CBOE S&P 500 Implied Correlation Index 48.3 +5.5% 
  • ISE Sentiment Index 89.0 -12.0 points
  • Total Put/Call .95 unch.
  • NYSE Arms 1.24 +17.0%
Credit Investor Angst:
  • North American Investment Grade CDS Index 98.98 +4.2%
  • US Energy High-Yield OAS 465.81 +1.8%
  • Bloomberg TRACE # Distressed Bonds Traded 384.0 -1.0
  • European Financial Sector CDS Index 124.72 +4.3%
  • Italian/German 10Y Yld Spread 193.0 basis points -9.0 basis points
  • Asia Ex-Japan Investment Grade CDS Index 129.73 +.6%
  • Emerging Market CDS Index 339.50 +4.7%
  • China Corp. High-Yield Bond USD ETF(KHYB) 27.35 -.26%
  • Ukraine Sovereign Debt Credit Default Swap 8,663.02 -8.6%
  • 2-Year Swap Spread 33.5 basis points -.5 basis point
  • TED Spread 50.25 basis points -5.25 basis points
  • 3-Month EUR/USD Cross-Currency Basis Swap -23.0 basis points +.25 basis point
  • MBS  5/10 Treasury Spread  139.0 +2.0 basis points
  • iShares CMBS ETF 47.55 +.21%
Economic Gauges:
  • Bloomberg Emerging Markets Currency Index 50.95 -.2%
  • 3-Month T-Bill Yield 1.71% +6.0 basis points
  • Yield Curve 7.75 basis points (2s/10s) +1.75 basis points
  • China Iron Ore Spot 123.80 USD/Metric Tonne +2.7%
  • Citi US Economic Surprise Index -68.9 +2.8 points
  • Citi Eurozone Economic Surprise Index -28.0 -2.2 points
  • Citi Emerging Markets Economic Surprise Index 23.5 -2.1 points
  • 10-Year TIPS Spread 2.49 -8.0 basis points
  • Highest target rate probability for September 21st FOMC meeting: 65.7%(+.1 percentage point) chance of 2.75%-3.0%. Highest target rate probability for November 2nd meeting: 47.8%(+1.9 percentage points) chance of 3.25%-3.5%.
US Covid-19:
  • 250 new infections/100K people(last 7 days total). 15.0%(+2.0 percentage points) of 1/14 peak +29/100K people from prior report.
  • New Covid-19 patient hospital admissions per 100K population -77.8%(+1.7 percentage points) from peak 7-day avg. of 1/9/21 - 1/15/22
Overseas Futures:
  • Nikkei 225 Futures: Indicating -225 open in Japan 
  • China A50 Futures: Indicating -93 open in China
  • DAX Futures: Indicating -131 open in Germany
Portfolio:
  • Slightly Higher:  On gains in my in my index hedges and emerging market shorts
  • Disclosed Trades:  Added to my (IWM)/(QQQ) hedges and to my emerging market shorts
  • Market Exposure:  Moved to Market Neutral

Bear Radar

Style Underperformer:

  • Large-Cap Growth -2.2%
Sector Underperformers:
  • 1) Alt Energy -4.3% 2) Internet -4.0% 3) Retail -3.0%
Stocks Falling on Unusual Volume: 
  • COLL, APPS, RGP, SNOW, ABNB, RPD, ALT, ENTA, FND, RPAY, TREE, FNKO, VIVO, ESTC, TSLA, ALT, IAS, NKE, RGNX, SNX, PYCR, LYFT, NGM, PLAB and MDB
Stocks With Unusual Put Option Activity:
  • 1) EWU 2) SMH 3) NKE 4) AA 5) EWG
Stocks With Most Negative News Mentions:
  • 1) CAMP 2) TUP 3) VRCA 4) UNH 5) CDNA
Charts:

Bull Radar

Style Outperformer:

  • Mid-Cap Value -.3%
Sector Outperformers:
  • 1) Energy +2.3% 2) Oil Service +1.3% 3) Gambling +1.2%
Stocks Rising on Unusual Volume:
  • ESTE, LE, LVS, WYNN, QCOM and VG
Stocks With Unusual Call Option Activity:
  • 1) EVFM 2) DUK 3) NKE 4) WOW 5) QCOM
Stocks With Most Positive News Mentions:
  • 1) KZR 2) WYNN 3) STRO 4) LVS 5) TOUR

Mid-Day Market Internals

NYSE Composite Index:

  • Volume Running -9.0% Below 100-Day Average 
  • 9 Sectors Declining, 2 Sectors Rising
  • 44.5% of Issues Advancing, 52.0% Declining
  • 7 New 52-Week Highs, 39 New Lows
  • 19.8% of Issues Above 200-day Moving Average
  • Average 14-Day RSI 42.0% 
  • Bloomberg Global Risk-On/Risk-Off Index 4,986.0 +63.0 points
  • Russell 1000: Growth/Value 15,120.0 -1.3%
  • Vix 27.6 +2.4%
  • Total Put/Call .91 -4.2%
  • TRIN/Arms 1.27 +19.8%