Monday Morning Musings

The market is slightly weaker in early trading, after Obama made comments about further health care reform proposals. There are also new regulations about credit cards, which I have previously posted on the site.

The dollar is firm today, which is weighing on commodity prices. Oil is trading near $79.90, while gold is weaker at $1115. In the energy complex, Schlumberger (SLB) announced a stock-for-stock merger with Smith International (SII), valuing the latter at a 22% premium. SLB is down -5.6% on the news.

Among the sector ETFs, financials (+0.73%) are leading, while energy (-1.52%) is the big laggard. Also, real estate (+0.30%) is firm, while gold miners (-1.45%) are weak.

Asian markets rose overnight, after China's bank regulator called on banks to prudently manage their lending.

The 10-year yield is up slightly to 3.79%; and the VIX is up +2% to 20.50.

Trading comment: After a very solid last week, the market is now firmly overbought. The chart below shows the oscillator for the Nasdaq at its highest level since last fall. This usually makes it a risky time for making new buys. I raised a little cash last week, and will look for a pullback before putting new money to work. Overall, I still think investor sentiment is sufficiently bearish that any pullback will be contained, and not break below the early Feb. lows.