Wednesday, February 24, 2010

Market Bounces, Even With Greenspan Testifying

The market is getting a nice bounce this morning after yesterday's large selloff. The S&P 500 is still trading below its overhead 50-day average, so we will have to see if this is just a one-day bounce and more work needs to be done in terms of consolidation.

It's interesting that the new home sales report was quite weak this morning, showing an -11.2% decline in January, but the market seems to be shrugging it off.

The dollar is lower today, and that is helping some commodities. Oil is firm near $80, but gold is a relative laggard and trading below $1100.

Among the sector ETFs, financials (+1.39%) and tech (+1.02%) are leading, while utilities (-0.24%) and staples (+0.30%) are lagging. Elsewhere, emerging mkt (+0.85%) etfs are strong while homebuilding stocks (-0.57%) are weak

Chairman Bernanke is testifying this morning, and basically reiterating the same message the FOMC has been saying. That is, the job market is still weak, but showing less deterioration. Also, the FOMC continues to anticipate a moderate pace of recovery with inflation expected to remain subdued.

Asian markets were lower overnight, except China which bounced +1.3%; the 10-year yield is slightly lower at 3.67%; and the VIX is -3.28% lower to 20.68.

Trading comment: The market is still overbought, and needs more time to consolidate. That said, I still think the downside is limited after the recent pullback, and am looking for spots to put cash to work and add exposure. To reiterate, I am interested in stocks that reported strong earnings last quarter and have held up well during the correction. Some names on my list include Visa (V), Apple (AAPL), Research In Motion (RIMM), IBM, and Ford (F) to name a few.

long AAPL, IBM, F, RIMM, V


Post a Comment

<< Home