Wednesday, March 24, 2010

Markets Headlines-SP500 technical update-Treasury securities-Credit trading- SP500 technical update $SPY

Markets Headlines

·         SP500 technical update - Rally to 1174.72 new bull market high, after Mon’s 1153 bullish reversal day held the Jan peak. Rally in gear above there, for the 1177 Jan-Feb Head and Shoulders bottom obj, and 1186 Feb channel high. The Feb-Mar rally is maturing/losing some upside momentum, but both NYSE Comp and DJIA are confirming new 2010 highs. That is healthy from a Dow Theory standpoint. Big picture, the NYSE cumulative AD line continues to score new cycle highs, almost daily.  Cyclical bull markets tend to top months after this indicator peaks. Next macro resistance for 2010: 1200 July ‘08 low/break, 1229 Oct ‘07 61.8% retrace, and 1240 ‘08-’09 Head and Shoulders bottom obj. Latter is viewed as a ceiling. Closes below 1153-1150 start a short term correction phase, for the 1147 Feb channel low, and 1135 Mar 9 trough. Next is 1126 Mar 3 high, then interim support at 1116/1112.  M Krauss

·         Treasuries update – article in the WSJ - Robert Auwaerter, head of fixed income at mutual-fund company Vanguard Group, has become less bearish on short-dated Treasury securities.  He has moved his position on short-dated gov’t debt from “UW” to “neutral”.  Auwaerter doesn’t see the Fed hiking rates anytime soon.  WSJ   

·         Swap spreads ripped tighter Tues, as receiving demand (demand for fixed rate flows) swamped supply.  Desk notes that the spec trade was for swap spreads to widen, so big squeeze there, plus big corp issuance day leading to hedge corp supply.  Should see some reversal after squeeze/issuance wave passes, but definitely implies sentiment is for rates to stay on low end/inflation to remain muted for a while....

·         Debt sales - Corporate issuance has been strong. Tuesday, more than $3 billion in investment-grade corporate debt was sold.  Last week, some $20.4 billion in new corporate debt was sold, bringing March’s total so far to $65.5 billion (WSJ) 

·         Credit trading – more data coming to regulators - Regulators from around the globe including the Securities and Exchange Commission will now be able to obtain breakdowns of trading activity in credit default swaps, including the identity of the investors.  FT   

·         “Why the Market Rallied—And Will Continue To” – Cramer “Billion-dollar hedge funds have been caught on the wrong side of their trades, and now they’re racing to cover their bets”   

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