Tuesday, March 2, 2010

Color on the Tradining of Financials 03.02.10 1:10pm


·         Financials: Helping the tape move higher, Financials are outperforming as sovereign debt rallies across Europe. Macro and geopolitical headlines will continue to drive the groups short-term direction as company-specific catalysts are few and far between. Banks are outpacing Insurance names with little news outside of BAC's announcement of its warrant auction for tomorrow and headlines around ongoing insurance industry conference in Florida. Volumes remain light, and flows are following suit. We remain better for sale in the group for the third straight day as institutions show they have supply for sale at current levels, and HFs feel comfortable laying out shorts into strength. In banks, we're seeing a rotation within smaller cap regionals, and money center & super-regional names better for sale (including short) into strength. In insurance, we're seeing money continue to flow into non-life names, while HFs are scrambling to cover shorts in the life names as M&A speculation circulates around the group.

·         Brokers – electronic guys all sluggish today (TRAD’s monthly #s a bit softer); MS and GS are outperforming along w/the broader rally in banks.  COWN falls 6% post earnings. 

·         ExchangesNDAQ is up 3% and outperforming after its buyback announcement. 

·         Life insurance – some of the smaller cap names are outperforming – PNX, HIG, PFG all up few % while PRU is down and MET is up small. 

·         Non-life insurance – this group is pretty sluggish today (as it is when the credit-sensitive stocks rally).  ACE, PGR, ALL, AWH, ACGL, AXS are all in the red

·         Banks – the banks are the big stars of the market today, reversing their declines from Mon; the regionals are outperforming (but strength is pretty broad).  The BKX is now up more than 12% YTD and is the best acting market sub-sector; technically, the BKX is bumping up along the top end of its months-long range.  Within the banks, FITB, KEY, MI, STI, ZION, and WFC are outperforming. 

·         Best Performing sp500 financials: ZION, MI, STI, FITB, CME, NDAQ, HIG, WFC, LNC, PFG

·         Weakest performing sp500 financials: AIG, PBCT, ETFC, PRU, AON, NYX, PGR, SPG, MMC

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