Monday Morning Musings

The market is getting a small lift in early trading, although volume will likely continue to run light this week on another holiday shortened week.

Newsflow is relatively slow today, with no major economic or corporate reports to speak of. MasterCard's SpendingPulse report showed that US retail sales increased +3.6% this holiday season vs. last year, which is helping boost retail stocks.

The dollar is weak, which is supporting commodities. Oil is trading higher near $79, while gold prices are flattish around $1104.

Asian markets were mostly higher after Premier Jiabao in China said that it is too early to wind down the government's stimulus policies.

The 10-year yield is higher to 3.83%, and the VIX is also higher to 20.15, after falling to new yearly lows last week.

Trading comment: The market should hold up into year-end, although it is now back into overbought territory, so I would hold off on committing new money in any big way. I would think that we should see a pullback in January, but the fact that this view is becoming so consensus leads me to think that any selloff could be more shallow than most expect.

Sentiment has grown more complacent in recent weeks, so it will be interesting to see how quickly bearish sentiment returns if we get any sort of correction. If bearishness rises quickly, it would help limit the extent of a pullback. But if complacency persists, that would raise a red flag.