01/25/12 07:59 AM EST

THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – January 25, 2012

As we look at today’s set up for the S&P 500, the range is 21 points or -0.81% downside to 1304 and 0.79% upside to 1325.

SECTOR AND GLOBAL PERFORMANCE

EQUITY SENTIMENT:

US DOLLAR – We #SOTU Word Scored the entire speech last night and the US Dollar was not mentioned once. #FairShare had 5 mentions and #Capitalism = 0. Just words, but they matter – Even the NYT and BBC ran #FairShare in their headline this morning. It’s just not good for our Strong Dollar case. Clinton and Regan both rolled w/ Strong Dollar, Strong Consumption (ie 71% of US GDP).

TREASURIES – stocks lost all of their Pre-#SOTU speech Apple momentum and have gone red this morning as UST Bond Yields fall a few beeps and the Yield Curve compresses by 3 basis points d/d. If you had to score the speech on Growth, it didn’t score well either. 10yr UST Yields of 2.03% is the most important Global Macro line in our model right now. If we snap it, I’ll get more defensively positioned.

GLOBAL EQUITIES – at about 6PM last night we thought the futures had it right and Apple was going to bust a move taking the SP500 to a fresh YTD high – no dice. Instead we are looking at what’s called an Outside Reversal from Monday (testing new highs intraday of 1322, failing, and closing at/below prior closing high). Asian, European, and Latin American stocks are at risk of doing the same.

ADVANCE/DECLINE LINE: 236 (-262)
VOLUME: NYSE 742.71 (2.74%)
VIX: 18.91 1.29% YTD PERFORMANCE: -19.19%
SPX PUT/CALL RATIO: 1.78 from 2.24 (-20.54%)

CREDIT/ECONOMIC MARKET LOOK:

TED SPREAD: 52.35
3-MONTH T-BILL YIELD: 0.03%
10-Year: 2.04 from 2.06
YIELD CURVE: 1.81 from 1.83

MACRO DATA POINTS (Bloomberg Estimates):

7:00am: MBA Mortgage Apps, week of Jan. 20
10:00am: House Price Index (M/m), Nov., est. 0.0% (prior - 0.2%)
10:00am: Pending Home Sales (M/m), Dec., est. -1.0% (prior 7.3%)
10:30am: DoE inventories
11:30am: U.S. to sell $35b 5-yr notes
12:30pm: FOMC rate decision, est. unchanged at 0.25%
2pm: FOMC to release projections of economy, fed funds rate
2:15pm: Fed’s Bernanke to hold press conference

GOVERNMENT:

Rep. Gabrielle Giffords to resign today
House, Senate in session
8am: House Oversight subcommittee hears from General Motors CEO Dan Akerson and NHTSA Administrator David Strickland on Volt vehicle fires

WHAT TO WATCH:

More than 2,500 business, political leaders gather at World Economic meeting this week. More Davos coverage
Roche Holding made hostile bid of $44.50-shr, or $5.7b for Illumina to bolster cancer-drug sales
Apple shares rose in German trading after profit doubled, putting it on track to surpass Exxon Mobil as world’s most valuable company
President Obama pushed drilling for gas in shale rock and support for cleaner energy in State of Union
Obama also proposed new plan to help borrowers reduce monthly mortgage payments
Facebook trading on secondary markets may be suspended for 3 days
FOMC plans to release a policy statement at 12:30 p.m. in Washington after 2-day meeting. Central bank for the first time will release forecasts from participants for the main interest rate at 2pm, Bernanke plans to hold a press conference 2.15pm
Apollo Capital, Riverstone Capital said to consider $7b joint bid to acquire energy assets from Kinder Morgan: New York Post
German business confidence jumps to 5-mo. high
U.K. economy shrank more than forecast in 4Q, leaving Britain on brink of recession
Ericsson drops to 3-yr low after earnings miss est.
Starwood Hotels President Matthew Avril said in interview in Davos occupancy rates in U.S. hotels are back above their level before the financial crisis started
International investors say capitalism is in crisis, with almost one in three backing radical changes to the system: Bloomberg survey