Thursday, December 10, 2009

Stocks Follow Yesterday's Late Strength Higher

Stocks are bucking the overseas weakness, as well as a modest move higher in the dollar, and following through on yesterday's late day strength.

The initial jobless claims this morning were a little higher than expected (474,000 vs. 455,000), but the trade deficit for October totaled $32.9 billion (vs. $36.8 billion expected).

Asian markets were lower overnight, but European bourses were higher earlier today after the Bank of England held its benchmark interest rate steady at 0.5% and reiterated its 200 billion pound monetary easing.

The dollar is slightly higher, which is weighing on the materials sector a bit. Oil prices are flattish near $71 while gold is slightly higher above $1130.

Among the sector etfs, energy is leading the action this morning, followed by consumer discretionary stocks; financials are the laggard so far, followed by materials stocks.

The 10-year yield is higher again to 3.48%, and the VIX is nearly -2% lower to 22.23.

Trading comment: It looks like another predicted selloff may have been averted. The major indexes are still comfortably above their 50-day averages, and not far from their highs. Also, many of the leading growth stocks are rallying again, and if we start to see them make new highs it is likely that the broader market will follow higher. Yesterday I mentioned the action in GS and AAPL, but I would also watch GOOG, ISRG, FFIV, PCLN, AMZN, CRM, etc. to get a better gauge on how "leading" stocks are acting.

long AAPL, GOOG, GS

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