• 3 headlines that made some noise in PM yesterday were 1) S&P saying 1-In-3 chance of Greece exiting EuroZone (so somewhat negative) 2) ECB’s Coeure pointing to banks should have direct access to funds from EFSF and ESM (small +ve) and 3) chatter IMF head Lagarde is endorsing additional ECB easing at this week’s policy meeting (per TTN).
  • Positive 1) IBEX +2.9% 2) Spanish 10y yield below 6.5% 3) €uro back to1.25 4) bounce in commodities (CRB first bounce in 4 days) 5) UST 10y back above 1.5% and 6) SPX holding VWAP day end (as longs nibbled).
  • Negative 1) Homebuilders and Banks got torched (fell 5% and 2.5% resp), 2) BETA index fell 1.4% with levered index down -2% and 3) macro bad (factory orders and ISM NY)
  • With early cyclical stocks,  high beta stocks and industrials lagging it is difficult to see a bottoming process here in equities.
  • I remain with my stands to avoid the current environment by simply trading intraday and in my 97% cash position.
  • Those wanting to buy some longer term positions may find decent opportunities here but must also recognize that downside potential is still very real.
  • Both the transports and the S&P 500 are not too far from the trendline dating back to the 2009 lows…
  • Also note the chart below comparing stocks to energy and oil.  Note the severe underperformance still by the energy sector.  Until energy can get its act together stocks will likely remain weak.

 

 

 

 

 

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