Will Early Pullback In Stocks Last?

The market pulled back this morning, with the S&P 500 briefly touching the 1155 level. But as we have been saying of late, buyers quickly stepped in and put some money to work, such that the Nasdaq is already positive and the SPX is down a little over a point as of this post.

Among the sector ETFs, consumer discretionary (XLY) and financials (XLF) are bucking the weakness, while energy and industrials are lagging.

In corporate news, Pfizer (PFE) said it would buy King Pharma (KG) for a 40% premium. Not bad. And chip bellwether Intel (INTC) reports after the close today.

We also will get the minutes from the last FOMC meeting, which always has the potential to move the market one way or another.

Asian markets were mostly lower overnight, except for China which bounced +1.2%. The dollar is up a bit, which is keeping a lid on commodities so far. Oil prices are down a bit near $82.30, and gold prices are also flattish around $1352.

The 10-year yield is down a touch, just above its 52-week highs, and hovering at 2.37%; and the VIX is up +2.2% to a still very low 19.38.

Trading comment: Frustrating action for anyone who isn't fully invested and looking for a pullback to buy. This is also a tough juncture as earnings season heats up starting tonight. As companies report, there will be more volatility in the reactions to earnings. I am going back to look for stocks who reported strong quarters last quarter, in the hopes that business momentum carried into the current quarter and portends more upside ahead.

The "cloud" stocks are bouncing hard today (FFIV, CRM, VMW, AKAM, RVBD, etc), and their action bears watching. These companies are still growing fast, so hopefully we are getting into a situation where expectations for the stocks have been lowered just ahead of earnings, and as such the odds for a positive reaction to earnings has improved.

long FFIV, VMW