Stocks Strong Again In Early Trading
I hope all those who were celebrating had a happy new year. Today, the market is once again higher in early trading. If today's gains hold, it would be the 7th up day out of the last 8, not a bad streak. But the market is once again overbought, so I don't want to chase things here.
News flow is again pretty slow today, and I expect trading volume to be low as well. Last night, Texas Instruments (TXN) narrowed its Q3 guidance outlook, and the stock is down slightly today. I thought it might weigh on the tech sector more today, but overall tech is trading firm.
Asian markets were higher overnight, after Japan's Q2 GDP rose +1.5%, and they also announced an $11 billion stimulus plan. European markets were lower this morning, after banks continue to trade heavy. Deutsche Bank (DB) fell sharply yesterday amid rumors that the bank plans to raise capital ahead of the new Basel III requirements coming out.
The dollar is firm this morning, and commodities are mixed. Oil is higher to $75.82, and gold is off slightly at $1246.
The 10-year yield is rising to a 1-month high at 2.81%; and the VIX is another -3.1% lower to 22.09.
Among the sector ETFs, energy (+1.01%) is strongest followed by industrials (+0.90%); utilities are lagging (-0.51%).
Trading comment: Market leading stocks have continued to act well and experience more breakouts to new highs. The S&P 500 has also crossed above that long downtrend line that has been intact since the April highs. The market is overbought once again, so I expect some consolidation and pullbacks in the next week or so.
But as the S&P gets back to 1115, which marks the flatline for the year, performance anxiety could begin to creep up as managers will not want to be left behind as we enter Q4. And hedgies who may not have added much value this year in terms of showing positive returns will likely be looking to squeeze in as much performance as they can before year-end.