Monday, January 4, 2010

LookBack At The Market 01/04/2010



· Market Update
SP500 +18 points/1.6% to 1133 (ends day @ highs); R2K +2.3%;
Nazz +1.7%. Stocks start off 2010 on an upbeat note around the world (w/China the
lone major exception, falling ~1% during Mon’s session); Nazz finishes at 16 month
high while SP500/Dow end @ 15 month highs. US equities keyed off a robust Asia
session and strong Europe open and held onto gains into the close. Desk noting a
small uptick in activity vs. the last two weeks of Dec, although things still pretty
quiet. Vanillas are adding to positions in small amounts and hedge funds are more
active. Some of the items helping stocks: 1) dovish Kohn comments on Sun, who
reiterated the Fed’s “low for long” mantra (this helped rally 2yr TSYs and weighed on
the buck); 2) robust PMI readings, esp. from China and the US; 3) anticipation of
pos. seasonal trends in equities and an uptick in fund flows; 4) rebound from the light
volume/no-conviction sell-off of last Thurs.

· Equity Sectors – strength across the board today but commodity-related stocks,
along w/financials, lead the market. Commodity-linked stocks benefit from higher
prices/weaker dollar, supply disruption headlines (Russia/Belarus and Chile/copper),
demand optimism (PMI indices around the world), and M&A activity (the TOT nat gas
deal just the latest transaction in that sector). Financials catching a bid today also,
led by credit sensitive stocks (the brokers, inc. MS, GS, AMTD, SCHW, etc, along
w/the banks, inc. BAC, are making some of the biggest moves higher). Within the
financials, the REITs are off ~0.5% today and the weakest big group. Tech is pacing
about inline w/the SP500; within tech the SOX outperforms (although analog semis,
an important sentiment indicator for the SOX, are flat-to-down on the
day). Discretionary, staples, utilities are all up 1% or less and
underperforming. Retailers are flat-to-down small ahead of their same-store sales
this Thurs.

· Best performing sp500 stocks : WYNN +9.8%, TSO +9.3%,
CHK +8.5%, KEY +7%, VLO +6.8%, S +6.5%, AKS +6.5%, CNX +6.3%, RDC +6%,
GNW +6%

· Weakest performing sp500 stocks : LUV -2.19%, TDC -1.8%,
FDO -1.5%, GPS -1.5%, HCP -1.56%, TJX -1.4%, DUK -1.4%, DNB -1.19%

· Commodities
Commodities were stronger across the board today, thanks to a
positive China PMI report and a US ISM number. Oil jumped over $2 to finish above
$81.50 while natural gas soared over 5% towards $5.90 as investors feared colder
temperatures would persist in much of the US. Gold and copper were both up around
2 percent today, although they moved slightly off their highs towards the end of the

· FX
USD (DXY) was off 0.50% today as it begins to break its recent rally. The dollar
lost 0.60% to the Euro, gained 0.30% against the Pound, and lost 0.50% to the Yen.
The Euro gained 0.10% on the Yen today.

· Corp Credit:
Corp credit was in line to slightly ahead of the tape today as IG
spreads narrowed 3.5 bps and HY gained 1 3/8 of a point.

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