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THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - August 24, 2011

There’s nothing quite like an entire profession is being forced to “bet” on black or red into a man-made event at Jackson Hole. It’s pathetic and sad that a said “free market” has come to this.  As we look at today’s set up for the S&P 500, the range is 57 points or -4.68% downside to 1108 and 0.23% upside to 1165.

SECTOR AND GLOBAL PERFORMANCE

Yesterday’s 3.43% rally in the S&P 500 to another long-term (and immediate-term) lower-high didn’t change anything in our multi-duration S&P Sector Risk Management Model.  All 9 Sectors closed below both their TRADE and TREND lines for the 15th consecutive day.  Managing risk around ranges in US Equities with a bearish bias remains our strategy from today’s closing price.  On any follow through strength ahead of Jackson Hole, we want to be shorting Financials (XLF) and Industrials (XLI).

THE HEDGEYE DAILY OUTLOOK - levels

 

THE HEDGEYE DAILY OUTLOOK - bpgm1

 

THE HEDGEYE DAILY OUTLOOK - bpgmytd

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: +2119 (+2475)  
  • VOLUME: NYSE 1240.16 (+4.13%)
  • VIX:  36.27 -14.54% YTD PERFORMANCE: +104.34%
  • SPX PUT/CALL RATIO: 1.78 from 2.01 -11.38%

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 31.18
  • 3-MONTH T-BILL YIELD: 0.01%
  • 10-Year: 2.15 from 2.10    
  • YIELD CURVE: 1.88 from 1.87

MACRO DATA POINTS (Bloomberg Estimates):

  • 7 a.m.: MBA mortgage applications, prior 4.1%
  • • 8:30 a.m.: July durable goods orders, est. 2.0%; July durable goods ex-transports, est. (0.5%)
  • • 10 a.m.: June house-price index M/m, est. 0.2%; 2Q house price purchase index Q/q, est. (0.4%)
  • • 10:30 a.m.: DoE weekly inventories, crude est. build 1.5m bbl
  • • 1 p.m.: U.S. to auction $35b 5-year notes

WHAT TO WATCH:

  • Bullish sentiment decreases to 40.9% from 46.2% in the latest US Investor's Intelligence poll
  • Japan’s sovereign credit rating cut one step to Aa3, banks’ ratings lowered by Moody’s; Japanese govt to release $100b to fund loans by Japan Bank for International Cooperation, in an effort to cope with yen’s appreciation, Finance Minister says
  • German business confidence index drops to lowest level in more than a year
  • Biden says he “didn’t come to explain a damn thing” to China
  • German Chancellor Angela Merkel rejects demands that Greece provide collateral for emergency loans as splits emerged in her Cabinet, reflecting euro-area divisions on issue

COMMODITY/GROWTH EXPECTATION

  • COMMODITIES: we sold our Silver on 8/19 so now we can wait/watch for support = $40.18
  • COPPER – still sees no QG3 and neither does oil.  If Bernanke was going to save everyone’s P&L on Friday, OIL?COPPER would be recapturing at least their long term TAIL lines of support; neither are in the area code of that. Both remain BEARISH/BROKEN.

THE HEDGEYE DAILY OUTLOOK - dcommv

MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Merkel Rejects Seeking Collateral in Bailouts as Splits Emerge
  • BHP Second-Half Profit Climbs to Record on Prices, Output
  • Central Banks Seen Retaining Gold as Debt Crisis Escalates
  • Gold Rallies After Dropping From Record as Investors Seek Haven
  • Oil Slides From Four-Day High in New York After Japan Downgrade
  • Hurricane Irene Bearing Down on Bahamas on Way to North Carolina
  • Codelco Bets China Growth Will Justify $20 Billion Investment
  • Irene Likely to Be a ‘Major’ Hurricane Later Today, NHC Says
  • Copper May Drop on Concern Global Growth to Slow, Damping Deman
  • Drought-Baked Fields Curb 2012 U.S. Wheat Outlook as Prices Gain
  • Usiminas Port Bid Seen Quadrupling Its Iron Ore: Freight Markets
  • Bunge Says Syngenta Suit May Jeopardize Chinese Corn Exports
  • Glencore Cash Offer Values Minara Resources at A$1.02 Billion
  • Sino-Forest Downgraded by S&P on Delay to Probe, Profit Decline

CURRENCIES

THE HEDGEYE DAILY OUTLOOK - dcurrv

EUROPEAN MARKETS

  • EUROPE: what a mess; no bounce after the US tries its best to hold a 1 day move; Denmark and Poland down 1% this morn as the bear broadens
  • EuroZone Jun Industrial New Orders +11.1% y/y vs consensus +12.1%, prior revised +13.8% from +15.5%; EuroZone Jun Industrial New Orders (0.7%) m/m vs consensus +0.5%, prior +3.6%

THE HEDGEYE DAILY OUTLOOK - bpem1

ASIAN MARKETS

  • JAPAN – finally moves into crash territory overnight on the “news” that Paul Krugman/Bernank advice in 1997 to “print lots of money” has another side to the “bet”; Japanese stocks down -20.4% since FEB 2011.
  • KOSPI – after a 1-day relief rally like the US had, Korea continues to crash (down -1.2% overnight and down -21.3% since May 2nd which is the same day German DAX peaked and started crashing from – Korea and Germany are huge lead indicators on global industrial growth slowing).

THE HEDGEYE DAILY OUTLOOK - bpam1

MIDDLE EAST

THE HEDGEYE DAILY OUTLOOK - me

Howard Penney

Managing Director