Tuesday, February 23, 2010

Looking in the RearView Mirror 02.23.10

· Equity Levels: SP ends off 13.4 points/1.2% to 1094 (near day low of 1092). The

R2K ended off 1.14%. The Nazz finished off 1.28%.

· Market Update – catalysts behind the selling today: 1) stronger dollar hitting the

commodity-linked groups and was a headwind for risk assets in general; 2) weak eco

#s (esp. the German IFO reading and the US consumer confidence); 3) pressure in

tech (which was due in large part to the weak BRCD/CTV earnings and a neg. article

in Korea Times overnight re Samsung and memory…..tech ended off its worst levels

though following somewhat sanguine comments from execs @ the Goldman conf); 4)

the Fed action (see details below) that raised worries about tightening (while people

are prob. reading too much into the SFP sale, people are on edge after the discount

rate action); 5) the FDIC bank report had a neg. tone to it and hit the financials when

it crossed @ 10amET).

· Desk color – desk was busy for the morning but slowed considerably into mid-day

and the afternoon. Def. more sellers today than we have seen for the last ~1 week,

both vanillas peeling back exposure and shorts laying out fresh exposures. However,

nothing aggressive – the weakness was pretty orderly and not panicked. Tone a bit

more neg. than we have seen for last ~8 sessions; the dip buyers tried to mount a

rally but this petered out by ~3:30pmET and stocks ended pretty much @ their lows

(and below technically important 1097).

· Equity Sectors – broad weakness today; tech, financials, HC, industrials, energy,

and commodities all fall more than 1%. Tech was hit on neg. earnings (BRCD/CTV)

and cautious semi comments from Samsung (in a Korean paper overnight) although

ended off worst levels as a few execs at the Goldman conf made sanguine

comments (INTC, MU, YHOO, etc). SOX off ~3% and one of the weakest groups in

the market (memory and equipment hurt by Samsung comments). Financials fall

~1.7% as the group couldn’t hold its rally from Mon (banks fall >2% - regionals

underperform large money centers). Commodity linked groups fall ~1.5%+ (energy

and materials) on back of dollar strength (underlying commodities themselves were

pretty heavy for most of the session today). The transports outperformed today

(helped by EXPD, which was up 7% after earnings). Retail too had a bid after a few

earnings came in better (JWN, M, and HD trade up after earnings).

· Best Performing SP500 stocks (from Bloomberg): EXPD, ODP, TMO, WFMI, MIL,


· Weakest performing sp500 stocks (from Bloomberg): THC, RSH, FSLR, MEE,


· Commodities: Commodities were lower across the board today as a dollar spike

and very weak consumer confidence number drove commodities lower. Oil was off

nearly $1.50 to $78.85. Natural gas fell 11c to $4.78. Gold was off over $10 to $1103

after trading as low as $1100 in the early afternoon. Copper finished the day down

3%, near its lows of the day.

· FX: USD (DXY) was up 0.5% on the day, just off its highs of the session. The dollar

was up 0.7% against the Euro (at highs), up 0.5% against the Pound (near highs),

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