Thursday, July 15, 2010

Stocks Rebounding into Final Hour on Short-Covering, Less Financial/Energy Sector Pessimism, Bargain-Hunting


Broad Market Tone:

  • Advance/Decline Line: Substantially Lower
  • Sector Performance: Most Sectors Declining
  • Volume: Below Average
  • Market Leading Stocks: Outperforming
Equity Investor Angst:
  • VIX 25.68 +3.17%
  • ISE Sentiment Index 94.0 -2.08%
  • Total Put/Call .87 -7.45%
  • NYSE Arms 1.82 +45.90%
Credit Investor Angst:
  • North American Investment Grade CDS Index 110.30 bps +1.66%
  • European Financial Sector CDS Index 123.21 bps +3.44%
  • Western Europe Sovereign Debt CDS Index 130.66 bps unch.
  • Emerging Market CDS Index 242.16 bps +.82%
  • 2-Year Swap Spread 27.0 -3 bps
  • TED Spread 37.0 -1 bp
Economic Gauges:
  • 3-Month T-Bill Yield .15% +1 bp
  • Yield Curve 238.0 -6 bps
  • China Import Iron Ore Spot $117.80/Metric Tonne +.17%
  • Citi US Economic Surprise Index -28.50 -3.5 points
  • 10-Year TIPS Spread 1.80% -5 bps
Overseas Futures:
  • Nikkei Futures: Indicating -100 open in Japan
  • DAX Futures: Indicating +10 open in Germany
Portfolio:
  • Slightly Lower: On losses in my Medical and Technology long positions
  • Disclosed Trades: None
  • Market Exposure: 100% Net Long
BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just modestly lower despite poor economic data and the market's overbought technical state. On the positive side, Ag, Wireless, I-Banking and Drug stocks are especially strong, rising .50%+. shares are outperforming. The Japan sovereign cds is falling -3.05% to 83.52 bps. The S&P GSCI Ag Spot Index is surging another 3.3%. On the negative side, Gaming, Steel, Airline, Construction and Gold shares are under pressure, falling more than -.75%. Small-cap shares are underperforming. The 10-year yield is falling too much again, declining -6 basis points to session lows. The Spain sovereign cds is rising +3.15% to 224.53 bps. News from (BP), (GS) and (AAPL) is lifting the entire market and could remove a significant level of uncertainty from these shares. The Shanghai Composite came under renewed pressure last night and Shanghai copper inventories are jumping +26.92% today. If earnings come in ok after the close today and tomorrow morning, I would expect stocks to build on today's rebound tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, declining energy sector pessimism, diminishing financial sector pessimism and less hostile political rhetoric.

3 comments:

Anonymous said...

http://www.marketwatch.com/story/austerity-cloud-hangs-over-farnborough-2010-07-15?siteid=yhoof

Anonymous said...

http://www.bbc.co.uk/news/business-10654676

Gary said...

Thanks.