Thursday, November 12, 2009

A Rare Up Day For The Dollar

We have talked lately about the strong inverse relationship between stocks and the dollar. Today is no exception, with the dollar getting a strong (and rare) bounce, and that is weighing on stocks. This led one market watcher we read to exclaim, "Stocks are the new commodities".

There were more strong earnings reports last night, as earnings season has just about wound down to a halt now. Wal-Mart (WMT) beat estimates and raised guidance for 2010, ditto for both AMAT and HPQ in the tech space. And HPQ also announced that it was buying 3Com (COMS) for a nice premium. With so many analysts worried about 2010 earnings, its nice to see all of these companies reiterate and even raise guidance for next year.

On the economic front, weekly jobless claims came in a bit below expectations, so they are at least moving in the right direction, albeit slowly. This jobless recovery has not been lost on anyone, even the Obama Administration, who is said to be scheduling a special meeting to address the lackluster pickup in jobs.

If you noticed the last productivity report, which showed productivity in this country spiked to over 9%, the takeaway is that companies are finding ways to be more productive and get more done with less staff. I've always said that employment is a lagging indicator, so I wouldn't expect to see meaningful improvement on the jobs front until we are well into this economic recovery.

In Europe, the Bank of England said its extraordinary efforts to stimulate growth may be extended, as it forecast a long, slow economic recovery hindered by weak bank lending and the government's need to slash spending. Sound familiar?

Asian markers were lower overnight; the 10-year yield is up a bit to 3.48%; and the VIX is +5.2% higher to 24.22.

Commodities are lower, with oil prices falling back to $77.30 and gold prices declining to $1110.

Trading comment: The market is nearing overbought territory again, after a nice bounce this week. The S&P 500 is also running into resistance at the 1100 level. As such, I'm not chasing things here, but I remain in dip buying mode in the near-future.


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