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TODAY’S S&P 500 SET-UP - July 5, 2011

In Global Equities, a lot changed for the positive last week, but in a Fiat Fool world that only A) shortens economic cycles and B) amplifies market volatility.  We have been focused on the Euro/USD intermediate-term TREND line of 1.42 as support (the line that needs to hold or else a lot of other asset prices - particularly stocks) will start to break. Now that line = 1.43. Time and prices change my risk management scenarios. 

Euro/USD trading down -0.55% this morn to 1.44 is nothing to stress about.  Interestingly, on another sequential slowdown in high-frequency German data (Services PMI for June was 56.7 vs 58.3 in May), the DAX held its bid (we're long EWG and Germany is up +7.8% YTD).

China is the other equity market we really like and it just moved back to positive for the YTD this morn after a bigger rally from the lows than US stocks had. If the world isn't melting down, buy China and Germany at these prices before you buy USA.  As we look at today’s set up for the S&P 500, the range is 26 points or -1.92% downside to 1340 and 0.02% upside to 1340.

SECTOR AND GLOBAL PERFORMANCE

THE HEDGEYE DAILY OUTLOOK - levels 75

THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - global performance

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 1973 (+575)  
  • VOLUME: NYSE 865.08 (-13.15%)
  • VIX:  15.87 -3.93% YTD PERFORMANCE: -10.59%
  • SPX PUT/CALL RATIO: 1.30 from 1.38 (-5.50%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 23.56
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 3.22 from 3.18
  • YIELD CURVE: 2.72 from 2.73 

 

MACRO DATA POINTS:

  • 10 a.m.: Factory orders, est. 1.0%, prior (-1.2%)
  • 11 a.m.: Weekly export inspections
  • 11:30 a.m.: U.S. to sell $27b 3-mo. bills, $24b 6-mo. bills
  • 4 p.m.: Crop conditions: corn, cotton, soybeans, winter wheat

WHAT TO WATCH:

  • An EU-approved payout for Greece may result in a default rating, S&P said yesterday
  • Australia leaves cash rate unchanged at 4.75%, as expected
  • Eurozone May retail sales (1.9%) y/y vs consensus (0.5%) and prior revised to +0.8% from +1.1%
  • ECB will continue to accept Greek debt as collateral- FT


COMMODITY/GROWTH EXPECTATION

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Bear Market in Tin Ending as Shortages Mean PT Timah’s Profit Advances 55%
  • Crude Oil Halts Two-Day Decline in London on Speculation of Rising Demand
  • Wheat, Corn Gain on Speculation Lowest Prices of 2011 Attracted Importers
  • Copper May Slide on Report Top Consumer China Is Set to Raise Rates Again
  • Sugar Climbs as Brazil’s Output May Miss Initial Estimate; Coffee Slides
  • Gold Climbs in London Trading as China Bank Exposures May Boost Demand
  • Palm Oil Dropping to Lowest in More Than Nine Months May Reduce Food Costs
  • Copper May Reach Record High by October on ‘Bull Flag:’ Technical Analysis
  • Vale Has No Concern Iron-Ore Demand in China May Slow, CFO Cavalcanti Says
  • Soybean Oil Imports by India to Drop 40% as Premium Widens Over Palm Oil
  • India’s Farm Ministry ‘Not Pushing’ for Exports of Wheat, Rice, Pawar Says
  • Rapeseed Imports by Pakistan to Slump as Prices Climb, Buyers’ Group Says
  • Rubber Drops Most in a Week on Concern Chinese Demand May Weaken on Rates
  • Hedge Funds Reduce Natural Gas Bets by Most in Four Months: Energy Markets

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - daily currency view

EUROPEAN MARKETS

  • EUROPE: holds up reasonably well given the German Services PMI slowed sequentially (were long $EWG); Spain remains below its TREND line

THE HEDGEYE DAILY OUTLOOK - euro performance

ASIAN MARKETS

  • ASIA: Chinese stocks (were long $CAF) continue higher, now back into the green for the YTD, but the Hang Seng not confirming, still below TREND

THE HEDGEYE DAILY OUTLOOK - asia performance

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

Howard Penney

Managing Director