Monday Morning Musings: No Options Hangover Today
The market is doing its best to further frustrate the bears and continue to march higher. There is a trend in the market that many hedgies look for, and that is that when the market is strong into options expiration (last Friday), there is usually a "hangover" on Monday.
This anomaly is certainly not kicking in today, at least not so far. The market is pushing higher into positive territory, on pretty much no new news. Asian markets were strong overnight, led by Japan, and that helped sentiment in the early going. There were also some analyst upgrades in the financials, which are the leading group. Utilities are the biggest laggards.
Its also interesting that noted perma-bear Nouriel Roubini reiterated his call for a double-dip recession next year. Earlier this year, his comments would have likely had a negative effect on investor sentiment, so its a good sign that his comments are now being taken with a grain of salt. That is, he was spot on in calling the big decline in financials and the economy, but it is less likely he will be as accurate with another bearish call.
The dollar is higher today, which is weighing on gold, but most energy and material stocks are higher nonetheless; the 10-year yield is up slightly to 3.55%; and the VIX is also a bit higher to 25.24.
Trading comment: Without more news, earnings reports, etc, this continued buying feels more like underinvested managers who are being forced into chasing stocks higher for fear of being left behind by their benchmark indexes. I can tell you that this is a very real phenomenon, if you have never experienced it.
I wrote last week that I was looking for an entry point in a few stocks (BAC, RIMM, etc), and I'm kicking myself for not pulling the trigger. I admit to being surprised that the selloff had completely run its course after only 2 days. Of course, today's action tells me I am not alone in feeling that way.