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TODAY’S S&P 500 SET-UP - March 8, 2011


As we look at today’s set up for the S&P 500, the range is 19 points or -1.00% downside to 1297 and 0.45% upside to 1316.  The futures are trading higher as Oil falls for the first day in three.  Most Asian stocks climb on speculation Chinese regulators will stop measures to cool lending and European markets are mixed as German factory orders rise more than expected in January.

MACRO DATA POINTS:

  • 7:30 a.m.: NFIB Small Business (Feb.) est. 95, prev. 94.1
  • 7:45 a.m.: ICSC Weekly retail
  • 10 a.m.: Fed nominee Diamond testifies at Senate panel
  • 11:30 a.m.: U.S. to sell $23b in 52-wk bills, $40b in 4-wk bills; 1 p.m.: $32b in 3-yr notes
  • 12 noon: DoE energy outlook
  • 4:30 p.m.: API energy   

WHAT TO WATCH:

  • U.S. Treasury Secretary Geithner to visit Frankfurt, Berlin, Germany, on March 8 to discuss global economic outlook, financial reform, “global efforts to impose sanctions applying maximum pressure” on the regime of Libya’s Qaddafi, sanctions against Iran for “its failure to meet its international obligations”
  • Outside advisers to the FDA meet to discuss findings of report on Novartis’s Arcapta Neohaler in people with chronic obstructive pulmonary disease
  • Israel may seek an additional $20b billion in U.S. security aid to deal with potential threats stemming from Middle East turmoil, the Wall Street Journal says, citing an interview with Defense Minister Ehud Barak

PERFORMANCE:

For the second day we have 5 of 9 sectors positive on TRADE and 9 of 9 sectors positive on TREND. 

  • One day: Dow (0.66%), S&P (0.83%), Nasdaq (1.40%), Russell (1.54%)
  • Month-to-date: Dow (1.11%), S&P (1.29%), Nasdaq (1.32%), Russell (1.36%)
  • Quarter/Year-to-date: Dow +4.43%, S&P +4.17%, Nasdaq +3.5%, Russell +3.65%
  • Sector Performance: - Materials (1.72%), Tech (1.27%), Consumer Discretionary (0.99%), Healthcare (0.77%), Industrials (0.93%), Energy (0.70%), Financials (0.67%), Consumer Staples (0.27%) and Utilities +0.39%

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -1614 (-696)  
  • VOLUME: NYSE 1035.64 (-0.28%)
  • VIX:  20.66 +8.39% YTD PERFORMANCE: +16.39%
  • SPX PUT/CALL RATIO: 2.28 from 1.98 (+15.65%)

CREDIT/ECONOMIC MARKET LOOK:


Treasuries finished weaker following some intraday strength

  • TED SPREAD: 20.81 -0.102 (-0.486%)
  • 3-MONTH T-BILL YIELD: 0.11% -0.01%
  • 10-Year: 3.51 from 3.49
  • YIELD CURVE: 2.81 from 2.81

COMMODITY/GROWTH EXPECTATION:

  • CRB: 362.88 flat YTD: +9.04%  
  • Oil: 105.44 +0.98%; YTD: +13.26% (trading -0.09% in the AM)
  • COPPER: 432.70 -3.53%; YTD: -3.76% (trading -1.20% in the AM)  
  • GOLD: 1,432.03 +0.27%; YTD: +1.12% (trading +0.18% in the AM)  

COMMODITY HEADLINES:

  • Copper Falls to Two-Week Low as Higher Oil Prices May Curb Economic Growth
  • Wheat Drops for a Second Day on Steady Winter-Crop Conditions in the U.S.
  • Silver, Close to 31-Year Peak, Displays Bearish Signal: Technical Analysis
  • Cotton Futures Plunge by Daily Limit After Rally to Record Seen Overdone
  • Gold Erases Decline in London Trading, Advances 0.2% to $1,434.98 an Ounce
  • Ivory Coast Conflict Escalates as Gbagbo Seizes Control of Cocoa Exports
  • Japan to Revise Mine Law to Access Subsea Resources of Up to $3.6 Trillion
  • India Aims to Double Milk Output Growth, Become `Major Player' in Dairy
  • Palm Oil `Volatile' as Biofuel Role Increases Mideast Impact, Bursa Says
  • Malaysia Taps Persian Gulf to Boost Commodities Trading: Islamic Finance
  • Lynas's Chief Turns Contrarian $5 Million Rare Earth Bet Into $3.5 Billion

CURRENCIES:

  • EURO: 1.3965 +0.16% (trading -0.27% in the AM)
  • DOLLAR: 76.496 +0.13% (trading +0.25% in the AM) 

EUROPEAN MARKETS:

  • FTSE 100: (0.10%); DAX (0.15%); CAC 40 +0.25%
  • European indices are trading mixed helped by easing crude prices on reports the OPEC may raise production.
  • German factory orders rose 2.9% M/m in Jan. vs est. 2.5%.
  • Telcos are among the biggest gainers as Morgan Stanley raises European Telecom Services sector to attractive.
  • Greek is the worst performing market - banks continue to slide after Moody’s yesterday cut its credit rating three notches to B1.

ASIAN MARKTES:

  • Nikkei +0.19%; Hang Seng +1.71%, Shanghai Composite +0.12%
  • Mast Asian markets traded higher this morning.
  • Construction stocks led South Korea higher, though tech stocks fell.
  • Japan rose slightly on short-covering and acquisition activity. Tech shares followed their US peers down, but bargain-hunting more than made up for the declines.
  • Rumors floated around Europe that China might raise reserve requirements post-close, but citing sources, Reuters actually reported that the country reversed requirements that had been imposed on some banks after they curtailed their lending

Howard Penney

Managing Director

THE HEDGEYE DAILY OUTLOOK - setup