Back In The Saddle

Good Tuesday Morning. I'm back in the saddle after a long weekend in Cleveland where I took my daughter to visit my folks. A great time was had by all, expect for the Cavs which head into tonight's game trailing 2-1 to Orlando. But I have to admit LeBron's game winning shot Friday night was probably the greatest game winning shot I have ever seen.

Now back to the markets. The turnaround this morning was very surprising. The futures were down all night and this morning. Asian markets were weak overnight after the nuclear tests in N. Korea. Then we heard that GDP in Germany contracted -3.8% to a record low in the 40 years of record keeping. And early this morning the CaseShiller Home Price Index for March came in at 140.0, down from the prior reading of 143.1, and showed a -18.7% decline in home prices. Ugly.

But soon after, the Consumer Confidence Index for May was released, and it was much better than expected. The index rose to 54.9, its highest reading of this year, and well above the 42.6 consensus expectations. Since much of the economic rebound revolves around confidence, this is a welcome sign, and stocks immediately turned higher. As fo this post, many of the major indexes are up more than +2.0% on the day.

The dollar is higher this morning, while oil and gold are a bit weaker; the 10-year yield is up again, to 3.46%, after another big bounce higher last week; and the VIX, which also bounced higher last week, it down -6% today near 30.60.

Trading comment: The S&P 500 is rallying back to the 900 level, which is right around the uptrend line that I have posted before going back to mid-March. And the SPX has yet to break below that 875 support I have been talking about, despite nearly every commentator I can think of saying that a move below those levels was a done deal.

Our recent position adds are hanging in there, still midly positive. I am still looking at adding the insurance etf (KIE), as those stocks remain undervalued in my opinion. The only trade I have made so far today is to take partial profits on CME, which is up roughly +25% since we added to it back in April.

Be back later with a chart of the day, and for those who have requested a sentiment analysis update, I will try to get one up this week.

Good luck trading--

long CME