Monday, December 14, 2009

Monday Morning Musings: Dubai Gets A Lifeline

The markets are nicely higher this morning on relatively light news. The two major news items were Dubai getting $10 billion in financing from Abu Dhabi to stave off a debt default, and Exxon (XOM) paying $41 billion in stock for XTO Energy (XTO), a 25% premium to Friday's closing price.

There was also an announcement that Citi (C) has reached an agreement to repay its $20 billion in TARP funds, which will involve issuing $17 billion in common stock. Concerns over further dilution are weighing on the stock, which is down -5% right now.

The dollar index is lower today, which is boosting commodities. Oil is trading a little higher near $70 and gold is bouncing back to the $1125 level.

Asian markets were higher overnight; the 10-year yield is flat near $3.54%; and the VIX is down another -2.7% to 21.00.

Trading comment: The market is trying to break out of its recent trading range that has capped most stocks for the last month. I am watching the stocks that have held up the best over the last month, as I think those are the candidates with the best shot of breaking out and making new highs into year-end.

I have not made any major allocations recently, but I have used pullbacks to pick away at etf positions like tech (XLK), insurance (KIE), agribusiness (MOO), and healthcare (XLV).


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