Monday Morning Musings

The markets opened on a weak note, but have since rallied back into positive territory. There has not been a lot of market moving news this morning, and just a few earnings reports trickling in.

The dollar is weak this morning, which is helping boost commodity prices. Gold is rising back above $1070, and oil is trading near $71.50.

Among the sector ETFs, energy is leading the way (+0.80%), followed by tech (+0.62%). Utilities and financials (-0.11%) are lagging so far. Among subsectors, homebuilders are rallying +2.86% and oil drillers are up +1.18%.

The 10-year yield is higher to 3.60%, and the VIX is falling back down -2.1% to 25.57 after rallying over 29 on Friday but reversing lower in the final hour of trading.

Trading comment: The market is still pretty oversold, and I like stocks here for an oversold rally. I think we should get a nice bounce this week, but I like em just for a trade. As I said to watch for, sentiment has been approaching some very bearish levels. To wit, the CBOE put/call ratio hit 1.21 on Friday, a high level. Bears in the AAII survey have climbed to 43% (and 29% bulls), and the Rydex Ursa/Nova ratio plummeted to .514 last week, as market timers rushed into bear mutual funds.

I would not be surprised to see us bounce in here for a little while, and then experience another pullback thereafter. I think there is a good chance that second pullback does not make a lower low, and I am in the minority in that camp. That would offer a good buying opportunity heading into Spring.