Can The S&P Make It Seven In A Row?

The market finished higher again yesterday, for a 6th straight session, and although stocks opened lower this morning they are currently working their way back into positive territory. A 7th straight up day would be quite a feat.

JNJ reported solid earnings this morning, and raised full-year guidance, but its stock is pulling back from a big pop yesterday. CSCO said it is buying Starent Networks (STAR), a stock that I have mentioned here before, and the very stock I wrote that I was taking profits on yesterday. DOH!!

Financials are lagging the market so far, after Goldman Sachs (GS) was downgraded by Meredith Whitney Advisors. I'm not sure why her calls have so much impact. Sure, she had a great call last year with the banking collapse, but she has basically been wrong this year by clinging to her bearish stance.

Tech stocks are leading the action so far, ahead of Intel (INTC) earnings tonight. Google and IBM report on Thursday.

The dollar is lower again, go figure, which is boosting oil and gold. Oil prices are hovering below $74, while gold prices are near $1060 now, having hit new highs in overnight trading.

The 10-year yield is lower to 3.32%, after being closed for the Columbus Day holiday yesterday; the VIX is up just slightly to 23.10, but back down well below its 50-day.

Trading comment: I took some profits on some individual stock trades yesterday, as the market is getting closer to being overbought again. Although we are not there yet. With the S&P very near new highs, I would not be surprised to see a slight pullback before a break to new highs. Then we could get a bit of a rest.

Yesterday I was looking at P/E ratios for emerging markets, and how much multiples have expanded over the last several months. For many countries, the P/E expansion has been enormous, but interestingly the country with the smallest multiple expansion has been China (FXI). China has also had a major correction already this year, and that could make it a candidate to play catch-up into year-end, especially as the govt. there keeps its foot on the gas to boost its economy. As such, I am looking at adding to our exposure to China via the FXI.

long GS, GOOG, IBM, VXX