Tuesday, March 16, 2010

Equity Sectors-Market Update-Catalysts for the move higher today $SPY


· Market Update – stocks pick up where they left off Thurs after spending Fri and Mon trading flattish and digesting the recent rally (sp up 5.5 points/0.5% as of 12:15pmET, setting another fresh high for this rally). While there are some fundamental catalysts behind the strength today (see below), there remains a firm bid underneath the tape that remains interested in accumulating long equity exposure. Volumes are still on the light side. Shorts are being covered, but this isn’t the primary reason for the strength (long buying playing an important part). The strength is pretty broad (utilities, energy, industrials, tech, financials are all up ~0.6%+). Large important stocks are making important technical moves (see INTC today and GE extending its recent gains). Somewhat mixed signals as credit treated flattish and TSYs have a bid to them.

· Catalysts for the move higher today:

  • 1) eco #s coming in better than expected (esp. on the housing front; stripping out multi-family, the more important single family numbers look even better);
  • 2) positive news on the sovereign front (on Mon, the Moody’s comments around the US/UK AAA ratings being at risk received a lot of attention, but Moody’s is hosting a call today and clarifying their remarks, stating that no AAA sovereign credit faces near-term risk; Moody’s added that Spain, which has been a big concern among investors, remains well within AAA parameters. Separately, S&P just came out and took Greece off watch negative while White House officials have said the US will not lose its AAA rating); [ you know whats so amusing about these credit rating agencies is that the United State Justice Department have these guys by the ballz, cause if they were ever to downgrade the credit rating of the United States you would have the CEOs of S&P, Moodys and Fitch doing 10-20 in a federal bound me in the ass facility; theback9]
  • 3) anticipation the Fed will retain its “extended period” language this afternoon.

· Equity Sectors – broad strength today; financials, tech, industrials, energy, utilities are all up 0.6%+ on the day. Materials are up >1% and outperforming, due in large part to the dollar weakness (NUE’s earnings update also being received well; CLF extends its recent strong move higher, up another 5% on the day). Tech is up 0.5% w/the semis driving the strength (the SOX is up >2% w/INTC up 3%). Industrials are up 0.7% (GE extends its recent strong rally – the stock is up another >2% today). The financials are up 0.7%, w/regional banks (and C) and the REITs driving the group higher.

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