If we modeled out volume like we do other stock and indices, I’m confident that volume would be broken on all three durations - TRADE, TREND AND TAIL. Yesterday, the S&P 500 traded within a very small range on no volume. The only sectors yesterday with news flow of consequence was managed care, which was a drag on Healthcare (XLV) after outperforming of late. Commodity stocks and parts of the market leveraged to the RECOVERY trade also put in a mixed performance.
Yesterday, we bought the VXX. Volatility (as measured by the VIX) has lost 33% since February 8th (when both Greece and the US stock markets put in short term lows). As Keith said yesterday “I'm not a buyer of complacency; more a buyer of short selling fear.” The Hedgeye Risk Management models have levels for the volatility Index (VIX) at: buy Trade (17.29) and sell Trade (21.54). The VIX continues to be broken on all three durations - TRADE, TREND and TAIL.
Technology was the best performing sector yesterday, despite the SOX trading down slightly on the day. CSCO was the standout in the communication equipment space, while YHOO outperformed the Internet names. We continue to be LONG the XLK.
Next to Financials (XLF), the best performing sector over the past month is Consumer Discretionary (XLY), rising 11.5%. The retail sector is on a three weak tear and outperformed again yesterday. Another bright spot was MCD, on the back of better-than-expected February global comps.
Financials also continue to outperform the broader market. Yesterday’s outperformance was on the back of M&A activity in the insurance sector, while investment banks and money center banks extended their recent outperformance.
As we wake up today, equity futures are trading below fair value with the futures having turned lower since Europe's sluggish open. As we look at today’s set up the range for the S&P 500 is 25 points or 1.8% (1,118) downside and 0.4% (1,143) upside.
In early trading copper is trading lower after declining slightly yesterday. Inbound shipments of refined copper fell for the first time in three months. The Hedgeye Risk Management Quant models have the following levels for COPPER – Buy Trade (3.34) and Sell Trade (3.50).
Gold is slightly lower in early trading, despite the dollar trading slightly lower. The Hedgeye Risk Management models have the following levels for GOLD – Buy Trade (1,103) and Sell Trade (1,149).
In early trading, oil is trading slightly lower as analysts forecast rising crude supplies in the U.S. The Hedgeye Risk Management models have the following levels for OIL – Buy Trade (80.07) and Sell Trade (82.36).