Monday Morning Musings
The market is off to a weak start in early trading, which is kind of surprising given that Europe was doing well before our markets opened. Most sectors are trading lower, except for energy stocks, which are getting a bounce due to higher oil prices.
Oil prices are higher for a couple of reasons. First is that the dollar is lower this morning, which is boosting commodity prices. Second, the rising tensions in Israel are rattling the oil markets a bit. This has oil trading upwards of $39. Gold, natural gas, etc. are also higher so far.
Real estate stocks are trading lower amid continue worries about retailers going out of business, and an article this morning discussing the related issue of mall owners difficulties.
Outside of that, the newsflow remains relatively light, as does trading volume, as this is another holiday-shortened week of trading and some investors take the entire last week of December off. Not to mention that all the cash that has been raised in the last couple of months will likely continue to sit on the sidelines at least until the New Year.
Trading comment: Keep an eye on sentiment. It seems that traders got too bullish ahead of the potential Santa Claus rally. The CBOE put/call ratio opened at a low level of 0.74, and the ISEE just hit a really low level of 0.47. The ISEE made a new 52-week low last week (12/24) at 0.60, so this would be another new low.
The market often has a tough time rallying when sentiment is already this bullish. So in a contrarian sense, you want to see some pessimism grow so that the market can get back to climbing the proverbial wall of worry.