THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - June 17, 2011

 

Politicians may be market morons, but they understand career risk management. The Euro finding a bid this morning tells us the immediate-term TRADE coming out of this weekend's European meetings is UP to 1.43-1.44.  That's why we sold our long USD position yesterday (I want to buy it back lower).

 

Overall, the dominating intermediate-term TREND of Deflating The Inflation (housing, stocks, commodities) remains - but today's prices finally started to show some quantified exhaustion in the Hedgeye immediate-term TRADE models (VOLATILITY = overbought; VOLUME studies = oversold). I'm looking for the SP500 to hold 1260 - and if it does, we could easily see another immediate-term +2.5-3% short covering rally.

 

Our favorite 3 sectors remain (in this order):

1.       Healthcare (XLV)

2.       Utilities (XLU)

3.       Consumer Staples (XLP)

 

On the short side, we covered Basic Materials (XLB) on the down move and wouldn't short any sector until we see 1260 tested and the bounce. All of the Hedgeye TRADE and TREND levels are attached in the spreadsheet.  Call sales@hedgeye.com if you have any questions.  As we look at today’s set up for the S&P 500, the range is 18 points or -0.60% downside to 1260 and 0.82% upside to 1278.

 

SECTOR AND GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - levels 617

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - global performance

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -320 (+1778)  
  • VOLUME: NYSE 1050.56 (-1.71%)
  • VIX:  22.73 +6.61% YTD PERFORMANCE: +28.06%
  • SPX PUT/CALL RATIO: 1.92 from 2.86 (-32.95%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 21.09
  • 3-MONTH T-BILL YIELD: 0.05%
  • 10-Year: 2.93 from 2.98
  • YIELD CURVE: 2.55 from 2.60 

 

MACRO DATA POINTS:

  • 9:55 a.m.: UMich Consumer Confidence, est. 74.0, prior 74.3
  • 10 a.m.: Leading indicators, est. 0.3%, prior (-0.3%)
  • 1 p.m.: Baker Hughes Rig Count

WHAT TO WATCH:

  • Texas state court hearing in suit between AMR/Sabre over Sabre’s attempt to move entire action to federal court
  • Basel Committee considering extra capital requirements of as much as 3.5%: two people familiar with talks
  • Vice President Biden and U.S. lawmakers determined to find $4t in savings, Biden tells reporters after group’s third closed-door meeting this week

COMMODITY/GROWTH EXPECTATION

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • UBS Limits Commodities Hiring Expansion as Boom Leaves Scarcity of Talent
  • Food Prices Will Stay High for Next Decade on Slowing Output, UN, OECD Say
  • Oil Heads for Biggest Weekly Decline in Six on Concern Over European Debt
  • Soybeans Fall to Lowest Price in a Month on Slowing Chinese Import Demand
  • Gold Drops on Strengthening Dollar, Selling to Cover Losses in Commodities
  • Sugar Advances on Increasing Demand Before Ramadan; Coffee Prices Climb
  • Copper May Decline for a Third Day on Concern About Greece’s Debt Crisis
  • India Rules Out Ending Ban on Wheat, Rice Exports as Food Demand Increases
  • Oil’s Declines in Middle East Show No End on Saudi Offers: Energy Markets
  • Commodities May Decline 3.3% as S&P Index Falls Short: Technical Analysis
  • Mongolia to Offer Tavan Tolgoi Coal Mine to ‘3 or 4’ Bidders, Batbold Says
  • Defunct Gold Mines Lure Investors on New Technologies, Record Price Gains
  • Blood-Diamond Curbs Imperiled for De Beers, Tiffany by Zimbabwe Violence
  • Gold May Climb Next Week as Europe’s Debt Criss Spurs Demand, Survey Shows

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

EUROPEAN MARKETS

  • EUROPE: gong show continues; we're covering all shorts into the weekend though and going naked long (and worried) Germany; Greece crashing.

 

THE HEDGEYE DAILY OUTLOOK - euro performance

 

 

ASIAN MARKETS

  • ASIA: end of darkness? awful week for Asian equities; we are getting long China on fear; staying short Japan on reality 

 

THE HEDGEYE DAILY OUTLOOK - asia performance

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

Howard Penney

Managing Director


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more