Tuesday, September 01, 2009

Evening Briefing for September 1st

* MARKET THEMES FROM TUESDAY - We saw anticipatory buying ahead of strong economic data, but selling on the news moved risk assets lower, though gold was a notable exception. Stocks fell below the lows from 8/27 and Monday, expanding the number of issues making fresh 20-day lows. Downside momentum, as measured by the Supply component of my Demand/Supply measure (updated each morning before the open via Twitter), hit an extreme (above 200). We tend to see a bounce the day after such a strong downside momentum day, though that upside edge does not tend to carry forward thereafter. Oil was weaker on the day; the U.S. dollar firmed; and 10-year Treasury rates fell below 3.4%. The significant volume to the downside in stocks suggests that, for now, large traders are favoring the bear side. Nice wrap of the market day here.

* OVERSEAS/OVERNIGHT NUMBERS: 4:00 AM CT - EU, GDP and PPI; 8:30 PM CT - Australia, imports and exports. Earnings reports due out Wednesday here.


-- Deflating asset bubble in China?

-- Social epidemics and the business cycle and other good reading;

-- Serious distribution today in stocks;

-- By focusing on stocks in play, you don't need broad market to move;

-- Stocks somewhat overvalued, weak dollar on the radar;

-- Views on China and the yuan;

-- Bondholders gambling on inflation and much more.