Newsflow Slows Ahead of Earnings Season

There is somewhat of a lack of newsflow this morning, and it is likely to stay that way until earnings season kicks off later this week when Alcoa (AA) reports.

Healthcare is the only sector positive today. The Washington Post reports that hospitals have agreed to contribute $155 billion over 10 years towards covering the cost of healthcare for those who are uninsured. Energy stocks are the weakest on another drop in oil prices, now down below the $63 level.

In other news, President Obama mentioned that a second stimulus package could be a possibility. I think that is a mistake, as there has not bee enough time to allow the first two stimulus packages to work. We already have a big combo of both monetary and fiscal stimulus in the pipeline, and we know these initiatives always work with a lag. Plus, the govt. can't afford another stimulus plan. Maybe they should focus on making this first one more effective as the dole out projects.

Asian markets were lower overnight; the dollar is lower today, helping support gold prices; and the 10-year yield is lower to 3.49%. The VIX could not get above 30 yesterday, and is currently trading around 29.60. I am watching the 30 level as an indicator that above that level we can expect a pickup in volatility, and below that level we can continue to expect "normal" trading.

Trading comment: Yesterday I mentioned that I was taking partial profits on some of our etf hedges as well as short positions. This morning, I have taken more profits in additional short positions (AMZN, CRM). The S&P has been down for 3 straight weeks, and I think a bounce is likely. I will probably look to buy some SSO for a trade to play a potential bounce.

short CRM