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TODAY’S S&P 500 SET-UP - November 30, 2011

Month-end is finally out of the way. Not a good month for most things other than the USD and Long-term Treasuries.  We have seen 2 down days for the USD, 2 up days for Global Equities = Correlation Risk.

As we look at today’s set up for the S&P 500, the range is 56 points or -4.03% downside to 1147 and 0.65% upside to 1203. 


Putting today’s 2ndconsecutive failure to overcome the S&P line of intermediate-term TREND resistance in context is critical: A) it was only the 2ndup day for US stocks in the last 9, and B) the SP500 is down -4.6% for November.

For the immediate-term TRADE (3 weeks or less) it’s also important to bear in mind the draw-down risk associated with the first 6 days of the new month.   Since May, the first 6 days have averaged close to -400bps.  Not perpetual. But not good either.

That’s one of the many globally interconnected reasons why only 1 of 9 Sectors are bullish on my immediate-term TRADE duration (Consumer Staples - XLP).  Financials (XLF) continue to look awful – down -24.4% YTD and crashing. Followed closely by Basic Materials (XLB) which are down -15.0% for the YTD and that Sector could very well be the worst on the next US Dollar up day.  Hedgeye is long Healthcare (XLV) and short (SPY).


THE HEDGEYE DAILY OUTLOOK - daily sector view

THE HEDGEYE DAILY OUTLOOK - global performance



  • ADVANCE/DECLINE LINE: -110 (-2154) 
  • VOLUME: NYSE 918.43 (-4.19%)
  • VIX:  +30.65 -4.64% YTD PERFORMANCE: +72.62%
  • SPX PUT/CALL RATIO: 2.07 from 2.71 (-23.63%)



  • TED SPREAD: 51.17
  • 3-MONTH T-BILL YIELD: 0.02%
  • 10-Year: 2.00 from 1.97   
  • YIELD CURVE: 1.74 from 1.74


MACRO DATA POINTS (Bloomberg Estimates):

  • 7am: MBA Mortgage, (prior -1.2%)
  • 7:30am: Challenger job cuts (prior 12.6%)
  • 8:15am: ADP Employment, est. 130k (prior 110k)
  • 8:30am: Non-farm productivity, est. 2.5%, prior 3.1%
  • 9:45am: Chicago Purchasing Manager, est. 58.5, prior 58.4
  • 10am: Pending home sales, est. 2.0% (prior -4.6%)
  • 10am: NAPM Milwaukee, est. 56.0, prior 55.5
  • 10:30am: DoE inventories
  • 11:30am: Fed’s Plosser moderates panel in SF
  • 2pm: Fed’s Beige Book



  • S&P downgrade of banks “expected” and “manageable,” Goldman says. Watch bank stocks; Bank of America hit a low of $5.03 during regular trading yday
  • FAA to increase safety inspections of American Airlines
  • President Obama travels to Scranton, Pennsylvania, to spotlight plan for jobs, then to New York for re-election fundraisers
  • Secretary of State Clinton in Myanmar



GOLD – down this morning because the US Dollar is up; this is a new correlation risk that’s developing and was only this high last in Q4 of 2008; immediate-term inverse correlation to USD now = -0.79 (vs TREND of +0.08). Liquidations and redemptions in the hedge fund business are significant and so is the gross and net long position in Gold.   Selling what they can vs. should.

  • Gold Producers Poised Like ‘Coiled Spring’ to Rally: Commodities
  • Former Goldman Traders Said to Start Hedge Fund With Mezvinsky
  • Iran Oil Sanctions Set to Shrink Circle of Foreign Buyers
  • Korean Shipbuilders’ Focus Is No Longer Ships: Chart of the Day
  • Gasoline Makers Showing First Losses in 3 Years: Energy Markets
  • Oil Pares Second Monthly Gain After U.S. Crude Stockpiles Rise
  • Iron Ore Seen Finding Floor at $120 as China Rebuilds Stockpile
  • Morgan Stanley Says Commodities Gains to Be Limited in 2012
  • Gold Falls in London, Erasing Monthly Advance, as Dollar Gains
  • Central Banks May Repeat Gold Purchases of 450 Tons, UBS Says
  • Copper Extends Monthly Decline After S&P Cuts Banks’ Ratings
  • China Lion Fund’s Asset in Gold ETFs Halved to $250 Million
  • Commodities Are Set for ‘Difficult’ Year in 2012, UBS Says
  • Palm Oil Has Longest Losing Streak in Five Years as Exports Drop
  • Commodities May Jump 7.1% in Next Two Months: Technical Analysis
  • Corn Declines on Rising Supplies From South America, Ukraine
  • Copper Falls in London as S&P Downgrades U.S. Banks: LME Preview
  • New Hope Holding Talks With ‘Several’ Potential Bidders
  • Commodities Upside Limited in 2012 on Growth Outlook, Dollar
  • Rubber Drops From One-Week High as S&P Downgrades Global Banks

THE HEDGEYE DAILY OUTLOOK - daily commodity view


EURO – just a pathetic week for European central planners and their currency’s credibility – rally to 1.34 is gone and now we’re testing intermediate-term lows of 1.32 again; bullish for the USD; bearish for Correlation Risk across Global Macro

THE HEDGEYE DAILY OUTLOOK - daily currency view


THE HEDGEYE DAILY OUTLOOK - euro performance



CHINA – not in headline news for the last few weeks but that doesn’t mean China’s growth slowdown (and implications to global growth) cease to exist; Chinese stocks got hammered overnight, closing down -3.3% close to their OCT lows (down -16.9% YTD). Thailand cut rates aggressively (125bps to 2.5%); expect more Asian rate cute (bullish for USD).

THE HEDGEYE DAILY OUTLOOK - asia performance


  • Citigroup Deal Haunts Pandit as Saudis Seek to Reclaim Fortune
  • U.K. Warns of ‘Consequences’ After Tehran Embassy Attack
  • VTB Capital Said to Hire 4 Bankers From Credit Suisse Dubai
  • Iran Oil Sanctions Set to Shrink Circle of Foreign Buyers
  • Dubai Sukuk in One of Worst Months Since 2009: Islamic Finance
  • Qatar Returns to Global Debt Market With $5 Billion Fund-Raising
  • Dubai Islamic Bank, Tamweel Hire Banks for Possible Bond Sale
  • Emirates NBD May Sell Sukuk for Acquisition, Debt: Arab Credit
  • Arabtec Expects Saudi Contract Value to Rise to $400 Million
  • Abu Dhabi Shares Rise to Week-High as FGB Spurs MSCI Optimism
  • Iran's missile base obliterated: satellite imagery
  • Ex-Saudi Spy Chief Warns Against Iran Attack, Jordan Times Says
  • Iran Blast Reports in Nuclear Province Fuels Sabotage Suspicion
  • Standard Chartered Names Hassan Jarrar CEO of Bahrain Unit
  • British Embassy Evacuates Staff From Iran, BBC Reports
  • U.A.E. Starts Investing in U.S. Treasuries, Backs Dollar Peg
  • U.K. Says Some Embassy Staff in Iran Are Leaving Tehran
  • British Embassy Staff Leave Iran Following Ransacking of Diplomatic Offices

THE HEDGEYE DAILY OUTLOOK - mideast perforamnce

The Hedgeye Macro Team

Howard Penney

Managing Director