Early Look: A Retail Bid?

The market is higher again in early trading, but lately most of these early pops have faded into the close. On 10/25, the market opened sharply higher but faded by the close that day. Yesterday the market had big gains in early trading, but actually closed in negative territory. So when I saw today's early pop, my first thought was I wonder if it holds.

I am surprised the market is up this much ahead of the elections and tomorrow's FOMC announcement. I think tomorrow could be a big volume day in the market, given these two large catalysts.

Asian markets were flattish overnight, while Europe was higher after strong PMI reports for Germany and eurozone. In Asia, the Reserve Bank of Australia raised its benchmark interest rate to 4.75% (from 4.50%) to ward off inflation. I think other Asian countries could follow suit if the global economy stays strong.

The dollar is lower, pushing gold up to $1355 and oil prices all the way to $83.88. The 10-year yield is lower to 2.60%; and the VIX is down 1% to 21.59.

There were some more earnings reports in the healthcare space from Pfizer (PFE), Amerisource (ABC), TEVA, etc. While most reports were better than expected, a lot of the stocks are selling off on the news.

Trading comment: The SPX touched 1194 this morning, but it is already fading and falling back below 1190. I do not think today is a good day to put money to work. The market has been rallying for weeks, and we have two huge announcements tomorrow. Unless there are some big surprises, I think it is more likely that we see some profit taking as opposed to new buying.

That said, I will admit there has been a persistent bid under the market lately, so who knows. But that's how I am playing it.