Monday Morning Musings

The market is higher in early trading, which is a little surprising following last week's 4-day rally and outsized gains. There was some M&A news this morning, in the form of Aon (AON) announcing it will buy Hewitt Associates (HEW) for $50, a 40% premium to Friday's close.

There is no economic news to report this morning, but earnings season kicks off after the close when Alcoa (AA) reports. Google (GOOG) is due up to report on Thursday, and I will cover the call here.

Asian markets were mixed overnight, with China higher and Japan lower. European bourses were higher this morning. The dollar is higher today, while the euro is lower. In commodities, oil prices are up a little to $76.35, while gold is down a bit to $1205.

The 10-year yield is steady around 3.05%, and the VIX is down -4% to 23.90, falling below the 25 level. This could be a bullish sign for equities.

Trading comment: The market has quickly worked off its oversold reading, and is now slightly into overbought territory. It is likely that we see some pullback this week, after last week's 4-day win streak. But after that I would not be surprised to see the market push higher again.

Of course, a lot will have to do with how earnings reports come in, and what management's tone and guidance look like. I am still in the trading range camp, but I could see the S&P 500 rally up to its overhead 50-day before running into stiffer resistance.

long GOOG, VXX