Monday, February 02, 2009

Monday Morning Musings

The market is lower in early trading, on the heels of weakness in the Asian and European markets. But the major indexes have bounced from their early lows, with the Nasdaq already in positive territory.

The newsflow is fairly light for a Monday morning. In economic news, the January ISM Manufacturing index came in better-than-expected at 35.6 (vs. 32.5 consensus). This is a nice datapoint, as we know manufacturing has been weak. Now we need to see if we can turn this single reading into a multi-month trend.

In corporate news, BE Aerospace (BEAV) reported a mixed quarter, but offered full year EPS guidance above current expectations. That has helped the stock bounce as much as +15%. Also, Human (HUM) reported earnings and slightly raised its guidance for Q1. It's stock opened lower, but has since reversed sharply higher.

The dollar is slightly higher this morning, while oil and gold are both lower. Biotechs are the strongest group so far, followed by tech in general. Banks and brokers are again the weakest.

The 10-year yield is down to 2.79%, after a big spike last week. And the VIX is up 6% today, near 47.50, after briefly breaking beneath the 40 level last week. Volatility levels continue to remain too high for the bulls, although the trend since last October has been lower.

Trading comment: The market is neither overbought nor oversold at current levels. If we can muster a bounce this week, I will probably look to add some hedges (inverse etfs) to the portfolio. January was a very difficult month, and the only thing that helped me outperform was to continue to trade around my positions and be more active in locking in profits when they surfaced. No rest for the weary.

long BEAV


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