Stocks Continue To Consolidate Recent Gains

The market continues to hold up admirably. Many investors, yours truly included, thought that the market might pullback more after its recent runup, but so far it has simply been consolidating around these levels without giving back too much.

Stocks are slightly lower in early trading, but not by too much. There were no economic reports to speak of, and a few corporate news items that were mostly positive (HPQ raised guidance, BA was awarded a contract, FDO reported strong earnings).

Among the sector ETFs, only energy (+0.29%) is higher, while financials (-0.90%) are the weakest so far. The financials have not participated as much in the recent rally, and their underperformance bears watching.

Asian markets were higher almost across the board overnight after a solid Tankan Survey, which measures corporate sentiment in the region.

The dollar is slightly weaker, while gold is back at new highs near $1308 and oil prices are down a bit to $75.80.

The 10-year yield is barely higher to 2.47%; and the VIX is +3% today to 23.27, but still hovering below its 50-day average.

Trading comment: Yesterday morning's dip in the S&P 500 again brought it down to that SPX 1131 level that I have been saying could act as initial support. That is the second time this level has held recently, and the market once again quickly bounced higher.

In the macro world, credit default swap (CDS) prices on European sovereign debt continue to move higher, indicating rising concern with Portugal, Spain, Ireland, etc. But so far it has not unnerved stock investors. I'm not sure it will, but I wanted to let you know what's on my radar. It will also be interesting to see what happens in the sentiment indicators this week given the recent rally in the market. Stay tuned for that.