Thursday, March 25, 2010

Market and Equity Sectors Update $SPY $BAC


·         Market Update – stocks stage strong rally, spurred higher by relief on certain sovereign debt situations (see below updates on ECB collateral rules and Dubai) and positive earnings (QCOM’s upside preannouncement and BBY’s results).  Wed’s slight pullback seen as nothing more than a brief refresh for another move higher.  Technically we have broken through the important 1177 level (although will be important how we close) and now 1189 is coming into view as the next big level.  Desk remains on the quiet side and people continue to lament the relatively tepid volumes.  Sellers are non-existent for the most part (existing longs are staying put while shorts are increasingly reluctant to lay out fresh exposures).  Covering is occurring and helping, but there is real buying helping to push prices higher.  Longs aren’t panicked, although as we head into Q/month end next Wed 3/31 during a holiday-shortened week (US markets closed Fri for Good Friday), performance anxiety is certainly becoming more acute.  There really isn’t a ton of major catalysts on the horizon until the BLS # next week (hits on Fri 4/2 when US equities will be closed) and the kick-off to earnings w/AA on Mon 4/12. 

·         Equity Sectors – pretty broad strength, but financials and tech (17% and 19% respectively of the sp500 = 2 largest groups) are leading on upside today (fins up >2% and tech is up >1.5%).  Re the financials, its more of the same w/the banks seeing buy interest….the BKX is up ~25% now YTD and the XLF made a technical break-out today.  the Big 4 money centers continue to inch towards setting fresh highs (WFC is prob. closest….both C, BAC, etc, not far behind).  Fundamentally, the BoA mod announcement (which C followed up on this morning), anticipation of a final bill in Congress (clarity on this issue would remove a big overhang for the group), and general expectation for better credit/lower provisions all helping this group.  The Bloomberg article talking about how the TSY will sell out of its Citi stake in an orderly fashion over time also helping.  tech really being driven by QCOM's upside preannouncement……BBY's earnings also helping.  PAYX and RHT are two weakest tech stocks (both had earnings last night).  On the downside, seeing slight downside in the “safe haven” groups (health care, utilities, and telecoms). 

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