THE HEDGEYE DAILY OUTLOOK

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - October 21, 2011

It’s been a good week to manage risk around the range – all of the levels (ranges) are tightening up; makes life easier, for now.  As we look at today’s set up for the S&P 500, the range is 42 points or -2.34% downside to 1187 and 1.12% upside to 1229. 

SECTOR AND GLOBAL PERFORMANCE

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EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: 631 (+1985) 
  • VOLUME: NYSE 958.13 (-0.61%)
  • VIX:  34.78 +0.99% YTD PERFORMANCE: +95.94%
  • SPX PUT/CALL RATIO: 1.40 from 1.78 (21.21%)

 

CREDIT/ECONOMIC MARKET LOOK:

TREASURIES: long-term bonds up small on the week with US stocks down small - managing risk around the bigger ranges was what won.

  • TED SPREAD: 40.54
  • 3-MONTH T-BILL YIELD: 0.03%
  • 10-Year: 2.20 from 2.18    
  • YIELD CURVE: 1.92 from 1.90

 

MACRO DATA POINTS (Bloomberg Estimates):

  • Noon: Ex-Fed President Hoenig to speak in NY
  • 1 p.m.: Baker Hughes rig count
  • 1 p.m.: Fed’s Kocherlakota to speak in Minneapolis
  • 1:20 p.m.: Fed’s Fisher speaks in Dallas
  • 3 p.m.: Fed’s Yellen speaks in Denver

WHAT TO WATCH:

  • European finance ministers meet in Brussels today to lay groundwork for Oct. 23 meeting of govt. leaders that had been deadline for solution to debt crisis
  • European summit for Oct. 26 set yesterday after Germany, France said EU needs more time to seal “global and ambitious” accord
  • President Obama nominated Thomas M. Hoenig as vice chairman of the FDIC board of directors
  • Samsung said to ship more than 20m smartphones in qtr-ended Sept. 30, topping Apple, Nokia, WSJ says
  • Fed’s Tarullo said the central bank should consider resuming purchases of mortgage bonds
  • Democrats failed last night in first attempt to salvage parts of President Barack Obama’s jobs plan

COMMODITY/GROWTH EXPECTATION                                             

COPPER – to a degree reflects this marked-to-market reality of Asian demand but also piggy backs on our call for a Correlation Crash that continues to find its way into the land of Commodities. At $3.11/lb, Copper is immediate-term TRADE oversold, but the bigger point is that it remains in a Bearish Formation (bearish on all 3 core durations)

GOLD: the TREND level has now been tested and tried ($1685), so the new range to manage risk within is 1

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MOST POPULAR COMMODITY HEADLINES FROM BLOOMBERG:

  • Worst Thai Floods in 50 Years Hit Apple, Toyota Supply Chain
  • Qaddafi Death Unlikely to Spur Libyan Oil Return: Energy Markets
  • Sugar Traders Most Bearish in Three Months on Glut: Commodities
  • Oil Gains Before Europe Rescue Talks; Libya Says to Boost Output
  • Gold Pares Worst Weekly Loss in a Month as Commodities Advance
  • Alrosa Follows Gazprom to Shortest Dollar Debt: Russia Credit
  • Cofco Seeks Acquisitions to ‘Balance’ China’s Food Demand
  • Copper Advances Most in Two Weeks on European Crisis Optimism
  • Copper Jumps 3.4% in London Trading After Selloff: LME Preview
  • Freeport Exhausted Copper Stocks on Peru Strike, Union Says
  • Corn Advances as U.S. Export Sales Climb to Seven-Month High
  • Gold May Extend Weekly Decline as Stronger Dollar Cuts Demand
  • Tin Producers in Indonesia Plan Fresh Measures to Defend Price
  • Duet Commodities Fund Fell 3.8% in September as Metals, Oil Slid
  • Iron’s Worst Rout in 15 Months May Deepen as China Slows
  • Bovespa Index Drops on Brazil Rate Outlook, Commodities Tumble
  • Shrinking Beef Supply Spurs Record Prices as Sales Decline
  • Gold Drops for Fifth Day, Set for Longest Slump Since January

CURRENCIES                                                        

EUR/USD – starting to numb itself into a range that makes sense to me – immediate-term TRADE support =1.36 and long-term TAIL resistance = 1.39. This was a monster short position in the hedge fund community that is in the midst of shaking some people out. Happens. Manage risk around the range into October 26th which is the latest Eurocrat Bazooka push date.

THE HEDGEYE DAILY OUTLOOK - dcurrv

 

EUROPEAN MARKETS

EUROPE: continues to oscillate between TREND (bearish) and TRADE (bullish) lines across the region

GREECE: up +3% this morning to 762 on the ATG index (TRADE resist = 789)

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ASIAN MARKETS

CHINA – big negative divergence for this week came from Chinese stocks losing another -0.6% last night to close out the week on its YTD lows; HK remains below its TRADE line of support, so let’s keep this accelerating deceleration of Asian Growth in mind

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MIDDLE EAST

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The Hedgeye Macro Team

Howard Penney

Managing Director