THE HEDGEYE DAILY OUTLOOK
TODAY’S S&P 500 SET-UP - August 30, 2011
With the S&P 500 up +7.7% in a week, the bulls are back and plenty of pundits have once again claimed to have nailed it calling another bottom. As we look at today’s set up for the S&P 500, the range is 56 points or -3.89% downside to 1163 and 0.74% upside to 1219.
SECTOR AND GLOBAL PERFORMANCE
Two other Sectors closed marginally above their TRADE lines yesterday for the first time in 6 weeks – Consumer Staples (XLP) and Healthcare (XLV). While this is a very defensive setup, it tells you everything you need to know after the fact. Top 3 Sectors 2011: XLU, XLP, and XLV.
With 8 of 9 Sectors bearish TREND and 6 of 9 bearish TRADE, the next few days of price/volume/volatility data will be critical. From a volume perspective, we’ve registered 22%-31% lower volumes studies in the last week of trading than we did during the thralls of August selling. Volatility (VIX) remains in a Bullish Formation (bullish TRADE, TREND, and TAIL).
EQUITY SENTIMENT:
- ADVANCE/DECLINE LINE: +2824 (+455)
- VOLUME: NYSE 912.20 (-18.51%)
- VIX: 35.59 -10.49% YTD PERFORMANCE: +100.51%
- SPX PUT/CALL RATIO: 2.26 from 1.65 +36.92%
CREDIT/ECONOMIC MARKET LOOK:
- TED SPREAD: 32.05
- 3-MONTH T-BILL YIELD: 0.02% +0.01%
- 10-Year: 2.28 from 2.19
- YIELD CURVE: 2.08 from 1.99
MACRO DATA POINTS (Bloomberg Estimates):
- 7:45 a.m./8:55 a.m.: ICSC/Redbook weekly retail sales
- 8 a.m.: Chicago Fed president Charles Evans on CNBC
- 9 a.m.: S&P/Case Shiller, est. M/m 0.0%, Y/y, (-4.6%)
- 10 a.m.: Consumer Confidence, est. 52.0, prior 59.5
- 11:30 a.m.: U.S. to sell $30b 4-wk bills, $30b 14-day cash- mgmt bills
- 12:15 p.m.: Minneapolis Fed President Narayana Kocherlakota to speak in Bismarck, N.D.
- 2 p.m.: FOMC Minutes released
- 4:30 p.m.: API inventories
WHAT TO WATCH:
- The FDIC filed an objection to Bank of America’s proposed $8.5b mortgage-bond settlement with investors
- FDA Advisory panel on post marketing issues for silicone gel- filled breast implants
- Tropical Storm Katia forms in Atlantic
- Italy PM Berlusconi agreed to overhaul the EU45b austerity plan that persuaded the ECB to support Italy’s bonds
COMMODITY/GROWTH EXPECTATION
COMMODITIES: Gold back below a hyper momentum line of support ($1809) this morning. The immediate-term TRADE support now $1733/oz.
MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:
- Chan Exits Sino-Forest 22 Years After Tiananmen ‘Nightmare’
- Northgate Takeover Proving Cheapest With Record Gold: Real M&A
- Gold May Gain in London After Decline Spurs Demand by Investors
- Oil Near 2-Week High as Spending Counters Forecast Supply Gain
- Copper Climbs Fifth Day on Optimism U.S. Economy Will Recover
- Wheat Declines on Speculation Rain May Help U.S. Winter Sowing
- Disruptions to Food Supply to ‘Ratchet Up Prices,’ Olam Says
- Sugar May Drop as Europe, India Boost Supplies, Kingsman Says
- Monsanto Says 100,000 Acres of Corn May Have Resistant Bugs
- Oil Falls From Near Three-Week High on U.S. Supply Forecasts
- China Pork Prices Have ‘No Room’ to Climb, China Agri Says
- China’s Jiangxi Rare Earth Mines to Halt Output, Xinhua Says
- Oil Erases Gain in New York on Concern Crude Supplies to Climb
- Copper Climbs a Fifth Day on U.S. Recovery Optimism: LME Preview
- Rubber Climbs to Three-Week High on Improved Spending in U.S.
CURRENCIES
EUROPEAN MARKETS
- GERMANY – as Germany goes so does the entire European continental market system and the German market continues to tell us that mid-late September isn’t going to be an enjoyable period for the bulls (vote on EFSF date); DAX was the 1st major market to turn red this morning and continues to crash – down -24.8% since May!
- GREECE – it’s a good thing most in the media doesn’t do geometric math. On Friday Cyprus and Greece were down -59% and -38% for the YTD respectively. Greece “rallies the most in forever” yesterday, then goes straight back down this morning (-3%) and obviously remains down -43% since the February YTD high and would need to “rally” another 75% to recover that -43% loss.
- ITALY - business confidence unexpectedly rose in August as manufacturers become more optimistic about demand; the manufacturing-sentiment index rose to 99.9 from a revised 98.8 in July; est 97.1
ASIAN MARKETS
- ASIA: oddly mixed again overnight with Japan strong +1.2% and China down for 2nd consecutive day (-0.38%); Thailand down -0.2%; Korea +0.8%
MIDDLE EAST
Howard Penney
Managing Director