TODAY’S S&P 500 SET-UP - May 18, 2011
US stocks have been down for the last 3 days and the last 3 weeks – and after taking a good hard looking at the intermediate term TREND line of 1319 in the SP500, we should see another low-volume bounce to lower-long-term highs; resistance = 1340. As we look at today’s set up for the S&P 500, the range is 17 points or -0.75% downside to 1319 and 0.53% upside to 1336.
SECTOR AND GLOBAL PERFORMANCE
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: -483 (+584)
- VOLUME: NYSE 971.43 (+7.07%)
- VIX: 17.55 -3.78% YTD PERFORMANCE: -1.13%
- SPX PUT/CALL RATIO: 1.89 from 1.88 (+0.77%)
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 22.96
- 3-MONTH T-BILL YIELD: 0.04%
- 10-Year: 3.12 from 3.15
- YIELD CURVE: 2.57 from 2.61
MACRO DATA POINTS:
- MBA mortgage applications index up 7.8% week ended May 13; Refis up 13%, largest gain in 10 weeks; Purchases fell 3.2%; Avg. 30-yr fixed rate 4.60%, lowest since end Nov., vs 4.67% prior week
- 10:30 a.m.: DoE Inventories
- 11:30 a.m.: U.S. to sell $5b 56-day cash mgmt bills
- 2 p.m.: FOMC Minutes
- 7 p.m.: Fed’s Bullard speaks in New York
WHAT TO WATCH:
- U.S. Treasury Secretary Geithner said the IMF needs to name an interim leader because Strauss-Kahn is “obviously not in a position” to run the fund; Europe seeks to keep top position
- EU Commission completes quarterly review of EU/IMF financial assistance program to Ireland; authorizes the release of the second installment
- Bullish sentiment decreases to 45.6% from 51.1% in the latest US Investor's Intelligence poll
- Banking groups opposed to simpler mortgage forms - Bloomberg
- Fed wants to subject US banks to annual stress tests - FT
- Russian President Dmitry Medvedev says he doesn’t exclude that some oil companies are colluding to increase prices for gasoline on the domestic market.
- Google’s First Bond Sale Drew Orders Exceeding $10b: WSJ
COMMODITY/GROWTH EXPECTATION
COMMODITY HEADLINES FROM BLOOMBERG:
- Milk Rally Causing Higher Prices at Wal-Mart Also Spurring Gains in Output
- Commodities Rebound on Outlook for Stronger Demand From Emerging Markets
- Oil Rises From Three-Month Low as Supplies of Cushing Crude, Gasoline Drop
- Copper Climbs to One-Week High as Commodities, Equities Rebound From Drops
- Corn Advances for Fifth Straight Day as Wet Weather May Delay U.S. Seeding
- Gold Gains for First Day in Four on Weaker Dollar, European Debt Concern
- Drought in China’s Hubei Withers Rapeseed, Wheat Crops, Delays Plantings
- Oil, Gold Will Drive Rebound in Commodities on Shortages, JPMorgan Says
- Coffee Rises on Concern About Limited Supplies; Sugar, Cocoa Prices Gain
- Silver May Slide 16% After Breaching 100-Day Average: Technical Analysis
- Drought Spells EU Power Squeeze as Nuclear Reactors Halt: Energy Markets
- Copper Demand From China’s Cable Makers May Double as Cities, Grids Expand
- Bunge Offers $138 Million for Tully Sugar, Above Louis Dreyfus-Backed Bid
- India Shipping to Gain From Japan $30 Billion Steel Bill: Freight Markets
CURRENCIES
EUROPEAN MARKETS
- UK Mar ILO unemployment rate +7.7% vs consensus +7.8% and prior +7.8%; UK Apr claimant count +12.4k vs consensus unchanged
- BOE keeps 6-3 vote in May to hold rates at record low
- Greek Banks Surge as ECB Officials Rule Out Debt Restructuring
- Irish Household Wealth Rises 6% in Q4 2010 , Central Bank Says
ASIAN MARKETS
- Asia was strong overnight
- Vietnam was a negative divergence down 2.03%
- Japan March tertiary activity index (6.0%) m/m – the biggest drop in 22 years -- to 93.5.
MIDDLE EAST
Howard Penney
Managing Director