Monday Morning Musings

The market is opening in a weak position, after a failed rally on Friday despite a much better than expected jobs report. That action is somewhat of a change in character for the market, and bears watching.

Financials are the standout group this morning, with most of the banks bucking the weakness and posting gains so far. The news is that the Fed will soon identify which banks can repay TARP funds. The size of the repayments could be as much as double the Treasury's initial estimate of $25 billion.

There is not much else in the way of market moving news this morning, and no major earnings announcements to speak of this week.

Asian markets were mostly lower overnight, excpet for Japan (+1.0%); the dollar is higher again this morning, which is weighing on gold and commodities; the 10-year yield is slightly lower to 3.83% after spiking to new yearly highs last week; and the VIX is up +3.8% so far to 30.73.

Trading comment: Friday I took partial profits in VMW. Bullish sentiment rose last week, which could mean investors are getting a tad complacent with the rally. Although I still think many managers remain underinvested. It could just be that the market needs a small shakeout to keep those newly minted bulls nervous.

The SPX remains above its key 200-day moving average, but not by a huge margin. The next technical milestones we need to see to confirm a new bull market would be for the 50-day average to cross above the 200-day, and for the slope of the 200-day average itself to turn upward from its recent downsloping shape.

I am using the S&P 500 as my key gauge, but you should note that if you look at the Nasdaq 100, which is full of growth stocks, its 50-day average has already crossed above its 200-day. Let's hope this is a leading indicator for the other major indexes.

long VMW