Monday Morning Musings

The market is adding to Friday's gains this morning in the face of some mixed news.

There were some strong earnings reports from the likes of Whirlpool (WHR) and Catepillar (CAT), but there were also some disappointments such as BlackRock (BLK). BlackRock probably isn't being helped by all of the chatter this morning about financial reform and what it will look like.

I don't want to get off on a rant about govt. regulation, but suffice it to say that it rarely has a beneficial effect ahead of the problems it targets. Does anyone view Sarbanes Oxley as a huge success?

There was also some M&A news this morning, with Hertz (HTZ) agreeing to acquire Dollar Thrifty (DTG) for a mix of cash and stock.

The dollar is higher today, pushing oil prices down a bit to $84.50, but gold is hovering near the unchanged level around $1155.

Asian markets were higher overnight; the 10-year yield is off a touch to 3.80%; and the VIX is +2.9% higher to 17.10.

Trading comment: The market continues to power higher, and breadth has actually been very good. The sentiment indicators are somewhat mixed, with things like the Rydex ratio and the CBOE 10-day put/call reaching bearish levels that have preceded corrections earlier this year. But some of the investor surveys are not showing the same levels of complacency, so I would say sentiment is mixed right now.

I have taken some profits in recent weeks, and still hold more cash than normal. But I also have held on to many of our positions as they continue to perform quite well. My game plan is to look for pullbacks before committing new cash, and to start out slowly in case we do get a correction that has some teeth to it.

long BLK


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