Greece: Buy The Rumor, Sell The News?

The market is slightly lower in early trading despite rumors circulating that a deal has been made between Greece politicians on the austerity measures. I have to wonder if we will see the classic buy the rumor, sell the news reaction. By that I mean that the market has been running higher on the perception that a Greek deal was in the works. Now that we might actually have an official deal, the market could be ready to take a breather.

There was another large handful of earnings reports last night and this morning. Stocks trading higher after reporting earnings include: ALXN, V, AKAM, SCSS, and PM. Stocks trading lower on earnings reports are CSCO, NWSA, PRU, and PEP to name a few.

In economic news, weekly jobless claims fell to 358,000. This was an improvement vs. last week's tally of 370,000.

Asian markets were mixed overnight. A key inflation reading in China came in above expectations. Europe's markets were slightly higher on Greek rumors, and the euro is also higher.

Commodities are getting a boost from the weaker dollar today. Oil prices are higher near $99.60, gold prices are up to $1750, and copper and silver prices are higher also.

The 10-year yield is rallying further, now up to 2.04%. And the VIX is 3% higher so far to 18.70.

Trading comment: Interesting action in AAPL lately. I'm not sure why the steady flow of funds into the stock. Of course, AAPL has been undervalued on a PE basis for a long time. So it could be that investors are suddenly willing to give it its due and a higher multiple to boot. I don't like the recent parabolic action in the stock. Maybe that's just the nightmares I still have about YHOO in 2000. But I would like to see AAPL make a more constructive base, or at least show an ascent on the chart that isn't so steep. I bet that's the first time you ever heard a money manager complain about making money, huh?

KAM Advisors has long positions in: AAPL, ALXN, SCSS, PM

Positive Earnings Reactions Continue To Outpace Negative Reactions

The market is slightly higher in early trading. For the first morning in awhile, there were no headlines out of Greece about progress or delays in its debt settlement talks.

Asian markets were higher overnight, led by China after the govt. raised gasoline prices and also provided support to the real estate market by instructing lenders to accommodate first time homebuyers.

In earnings news, positive reactions to earnings reports continue to outpace negative ones. Among the stocks rising after reporting are: TWX, DIS, CVS, AGU, IR, and the big ones of the day - RL and BWLD. Stocks declining after earnings include S, PNRA, and OPEN.

The euro is roughly flat this morning, and commodities are mixed. Oil prices are higher to $99.60, nearing the $100 level again. Gold prices are slightly lower nearing $1740. Silver prices are also lower, but copper prices are getting a boost.

The 10-year yield is rising further to 1.99%. The 2.00% level has acted like a magnet since early November. The VIX is flattish near the 17.60 level.

Trading comment: The stairstep higher action continues in the market. Those waiting for a pullback continue to be frustrated. This year is shaping up so far to be a year where it is proving more profitable to focus on individual stocks rather than the major indexes. I am focusing on those stocks that continue to show leadership and work their way to new highs. Also, stocks that have posted strong earnings and reacted positively should continue to act well. I think chasing laggards here in hopes of them playing catch up is a prescription for underperformance.

Will Dip Buyers Continue To Surface?

Lately it seems like every dip we've seen in the market has been quickly bought by folks looking to get more invested and put money to work in equities. With the market down slightly again this morning the question is will dip buyers continue to show up?

Earnings reports continue to garner positive reactions for the most part. The list of stocks moving higher after reporting includes: KO, SWI, HAR, PRGO, TDG, CSTR, APC, and YUM. A couple of stocks lower on their earnings reports are EMR and GSK.

Asian markets were lower overnight, led by a 1.7% loss in China. Europe's markets are also lower this morning amid continued delays in Greece's acceptance of austerity measures.

The euro is getting a bounce though, with the dollar lower. This is boosting commodities. Oil prices are back above $98 and gold prices are higher near $1735.

The 10-year yield is getting a nice bounce to 1.97%, poking just above its overhead 50-day average. For reference, the January highs were 2.09%. As for the VIX, it was higher earlier on but has since given up its earlier gains and is flat near $17.70.

Trading comment: Buy the dip remains the mantra that has worked so far this year. Investor sentiment continues to grow more bullish, but the indicators I follow are still far from levels that would indicate bullishness has reached extreme levels of too much complacency. Over the last few year, fund flows have been heavily tilted towards bond funds. It could be that we are beginning to see a reallocation out of some of those safety funds into investor allocations that are once again beginning to favor the growth side of the equation more. I know we are having those discussions at our firm, so it wouldn't surprise me to hear its going on at a lot of other firms as well.

KAM Advisors has long positions in EMR, KO, SWI, GLD, YUM

Monday Morning Musings

The markets are lower this morning on further delays with the Greek debt talks. Also, don't rule out the fact that the market had a very strong week last week, so some consolidation would be normal.

I called the Greek debt situation a yo-yo recently since we continue to see so much back and forth with the talks. Today it appears that Greece does not really want to implement the austerity measures as they have been laid out. I'm not sure how much wiggle room they have considering how badly they need the loans just to make their current debt payments.

There is little in the way of economic reports this morning. There have been a handful of earnings reports, but more of them are seeing negative reactions today. Stocks down after reporting include: HUM, SYY, LAZ, and SOHU. A couple stocks higher on earnings are HAS and BRO.

Asian stocks were mixed overnight. Japan was higher, but China was flat after the IMF trimmed its economic forecast for the country to 8.25% from 9.00% on weaker demand for exports.

The euro is lower and boosting the dollar. This is weighing on most commodities. Oil prices are lower to $97.25, gold prices are down to $1721, and silver and copper prices are also lower.

The 10-year yield is slightly lower at 1.92% after a nice pop higher on Friday due to the strong jobs report. The VIX is up almost 5% to 17.93 after plunging to a 7-month low on Friday.

Trading comment: With the market lower this morning, it will be interesting to see if dip buyers quickly step up again. The market is still overbought, but pullbacks have been few and far between. Friday's strong jobs report didn't help the bears at all, as it adds another economic indicator flashing improvement for the economy. New highs on the exchanges rose on Friday, and leadership in the stock market continues to broaden. This is another positive sign for the market.

Economic Data Much Better Than Forecasts

The market is rallying strongly this morning on a double dose of stronger than expected economic data. The first report was the monthly payrolls report, which showed the economy added 243,000 jobs in January. That was far greater than the 155k forecast. Private payrolls were also much greater than expected at +257,ooo vs. 168,000 consensus. Also, the unemployment rate fell to 8.3%.

The better than expected jobs report caused the futures to spike higher before the open. The market was only up slightly before the data was released. After the open, we got another dose of good economic data in the form of the ISM Services Index. The ISM rose to 56.8 in January, which was above expectations and also a nice increase from last month's reading of 52.6.

Earnings season continues to roll along as well. Among the stocks seeing positive reactions to their earnings reports are: TSN, WY, CLX, and APKT. A couple notable standouts on the downside this morning are EL and WYNN.

Asian markets were mixed overnight. The dollar got a boost from the jobs report, which is weighing on most commodities. Oil prices are higher to $97.13, but gold prices are lower near $1740, and silver prices are lower as well. Copper prices are higher on the strong economic data.

The 10-year yield is also getting a nice bounce. It is currently up 11 bps to 1.94%. As for the VIX, it has fallen another 6% and is now down at its lowest levels since last July (16.89). Do I smell a VIX trade coming?

Trading comment: Yesterday I mentioned the issue of performance anxiety, and today's action will likely put an exclamation point on it. Interestingly, the market also ran higher last year right into mid-February before experiencing a sharp 3-day correction. Guess what the high on the SPX was last Feb. before the correction? Answer: 1344. Guess what today's high is: 1343. Pretty similar. But the Nasdaq is doing much better, so I think the SPX can continue to play catch-up.

KAM Advisors was long CLX, GLD, SLV

Why The Facebook Halo Today?

There is a lot of hype surrounding the upcoming Facebook IPO. Given it's size ($100b mkt cap?) and the number of user Facebook reaches, I can understand all the hoopla. But I find it a bit confusing why today, after Facebook has filed its S1, that all of the other publicly traded social networking stocks would be trading so much higher. Look at ZNGA, LNKD, GRPN, etc. and you see big gains in all of them. I find the action odd.

In earnings news, we continue to see most reports beating expectations. This morning's list of stocks reacting positive vs. negative is fairly balanced, but the stocks showing positive reactions are up a lot more than the small declines on the stocks showing negative reactions.

Among the earnings gainers are: MA, GMCR, QCOM, LVS, and NUS. Stocks declining on earnings include: AZN, CAH, DOW, CI, CMG, and AGN.

The large number of disappointments coming out of healthcare related stocks is weighing on the sector, with the healthcare etf (XLV) lagging this morning by quite a bit. Energy stocks are up the most in early trading.

In economic news, jobless claims were slightly below expectations. Q4 productivity was in-line with expectations at 0.7%, while unit labor costs were higher than expected at 1.2%.

Asian markets were higher overnight, while Europe is mixed this morning. The euro has been bouncing around the flat line this morning. Oil prices are lower to $96.75; gold prices are higher near $1757; silver prices are also higher, while copper prices are flat.

The 10-year yield is flat near 1.84%; and the VIX is down another 2% to 18.18.

Trading comment: More breakouts to new highs today. Check out RAX. See V. MA is also close. View QCOM. Here comes MELI. Obviously AAPL. And I could go on. Those waiting for a dip remain frustrated, causing them to ask, "Dude, where's my pullback?"

KAM Advisors has long positions in AAPL, MELI, GLD, and SLV

Stocks Back In Rally Mode

The markets are nicely higher in early trade on a combination of solid economic data, good news out of Europe, and a bevy of solid earnings reports.

Europe's markets are higher today after a successful short-term debt offering in Portugal. Additionally, Germany, France, and the UK posted solid PMI manufacturing data. Asian markets were mixed overnight after one of China's PMI readings showed the sector still in contraction.

In terms of earnings reports here in the U.S., I like to look at how stocks are reacting to those reports. This morning we are seeing the number of stocks rallying on results significantly outnumbering those that are falling.

Among the positive reactions today are: BRCM, FTNT, STX, WHR, IACI, AET, TMO, and BEAV.

Declining stocks on earnings include: CHRW, AFL, and the big loser today - AMZN.

In economic news, the ISM Manufacturing index rose to 54.1 in January from 53.1 last month. Construction spending data for December showed a 1.5% rise, above expectations. The ADP payrolls report showed payrolls rose by 170,000 in January, but this was below the 200k figure economists were looking for.

The euro is getting a big bounce today at the expense of the dollar. This is helping commodities. Oil prices are up above $99 after falling hard yesterday. Gold prices are back to $1750. And copper and silver prices are higher also.

The 10-year yield is getting a small bounce to 1.83%. And the VIX is down -5% so far down to 18.45.

Trading comment: 'Don't fight the tape' is the mantra traders live by. So far this year, we have seen stocks stair-step higher and sector rotation keep the market moving up with few pullbacks along the way. Overbought conditions be damned. I often talk about performance anxiety among portfolio managers and I think the strong January we just had probably has most PMs caught flat-footed and looking for opportunities. One day we will wake up to a big enough selloff that it will make sense to step aside. But for the time being dips are being bought.

KAM Advisors has long positions in FTNT

Stocks Poised To Finish January On Positive Note

Stocks are higher in early trading on several positive earnings reports as well as a bounce back after three straight down days in the S&P 500. Yesterday the S&P got down near 1300 before buyers stepped in. That level also coincides with the 20-day moving average for the SPX.

The S&P 500 is poised to close out January with solid gains. Those who follow the "January effect" will note that the Stock Traders Almanac says that as goes January, so goes the year. The implication is that when January shows gains, it bodes well for a positive year in the market.

In earnings news, we are seeing more positive reactions in stocks this morning than negative. Among the gainers are: PFE, BIIB, LLY, TYC, UPS, PCAR, HRS, MAT, and ARMH.

Stocks falling after report earnings include: XOM, AVY, MHP, ADM, and the big loser today - RSH.

In economic news, the Case-Shiller Index showed another 1.3% drop in November from October. The Chicago PMI Index fell to 60.2 from last month's 62.5. And the Consumer Confidence index fell to 61.1 in January from 64.8 last month.

Asian markets were higher overnight, and the euro is higher this morning after speculation over continued progress in Greek debt talks. This one has really been a yo-yo, with lots of ups and downs. There is also talk that European officials have reached some agreement on future bailout funds for the eurozone, but I haven't seen details.

Commodities are higher today. Gold prices are up to $1747, oil prices have topped $100 to $100.50, and copper and silver prices are higher as well.

The 10-year yield continues to languish, still hovering near the 1.83% level. And the VIX is up a touch to 19.55, but hasn't closed above 20 in nine days.

Trading comment: After 3 consecutive down days and a test of the 1300 level yesterday by the S&P 500, I would have expected dip buyers to come in stronger. The SPX has bounced back to 1312 as of now, but already in early trading the gains have faded. We will have to see if buyers come back in later today. Also, the market continues to work off its overbought condition. There are a lot more stocks reacting positively to earnings reports this morning than ones that are selling off. Also, the SPX is on the verge of a golden cross, where the 50-day crosses above the 200-day average. This generally bodes well for further gains in the market.

Monday Morning Musings

The market is lower in early trading after closing last week higher for the 4th straight week. Guess how many times the market closed higher for 4 straight weeks in 2011? Zero. So it's the first time in awhile we have seen that streak. The market is also overbought and sentiment has risen to bullish levels in recent weeks. All of this sets the stage for a normal pullback-- possibly.

There isn't that much in the way of market moving news this morning, so the markets are taking their cues from overseas. Asian markets were lower overnight, and Europe is lower this morning. Concerns about Greece's ability to reach a compromise to its debt situation is weighing on Europe, and the euro is also weaker.

Commodities are sliding. Gold prices have eased back to $1725; oil prices are lower near $98.80; and copper and silver prices are down also.

There were a few companies reporting earnings this morning, but nothing too notable. Earnings season continues this week, but many of the biggies have already reported.

All 10 of the S&P sectors are lower so far today. Energy stocks are down the most, while utilities are down the least. Among international ETFs, China (FXI) is down the most in early trading.

The buying in the bond market has been furious since the FOMC meeting, and the 10-year yield continues to drop as a result. The 10-year yield is now below 1.85%, and nearing its lows from mid-December. Last year's lows back in September were 1.70%.

As for the VIX, it is spiking +9% today back above the 20 level. That's right about at the downtrend line that has been in place since late November, so we will have to see if that trendline holds.

Trading comment: We trimmed a few positions last week as the market got overbought, but will look to add back to positions on any further pullback. Usually the normal course of these short-term pullbacks is that the market gets overbought, pulls back a little to relieve that condition, and then rallies back again. If it goes on to make a higher high, the uptrend is in tack. But if the market makes a lower high, it is often a sign that a deeper or longer consolidation is in the works. For now, let's not get ahead of ourselves and see how quickly this dip gets bought. I think a lot of portfolio managers were not positions for the strong January we have seen and remain underinvested.

GDP Accelerates, But Still Below Expectations

The markets are mixed in early trading, with the Dow and S&P lower but the Nasdaq higher. Advance estimates on Q4 GDP came in at +2.8%, which is below consensus which was looking for +3.2% but still above last quarter's reading of only +1.8%. For those folks still calling for recession, GDP needs to either going to fall off a cliff or we are going to see some big revisions.

In other economic news, The Univ. Of Michigan consumer sentiment survey rose to 75.0 in January from 74.0 last month.

Earnings reports are being greeted with much cheer this morning. Despite a handful of better than expected reports, very few stocks are higher after reporting today. The few that are trading higher include: HON, EMN, and INVN.

But the list of disappointing reactions is larger and includes: RVBD, F, CVX, PG, SBUX, and MO.

The euro is higher this morning, and helping most commodities. Gold prices are up to $1732; oil prices are still above $100; and copper and silver prices are higher as well.

The 10-year yield has stopped dropping for the time being and found some support at the 1.93% level for a 2nd day. The VIX is fractionally higher to 18.75 and also looks to be bottoming.

Trading comment: I still think this overbought market appears a bit tired and in need of some sort of rest. If the market closes lower today it will be the first back-to-back down days since mid-December. That's a pretty long streak. What will be interesting will be to see how quickly dip buyers come in and look to get more invested on any market weakness. I suspect this first pullback won't gain much traction before rallying again.