Friday, December 10, 2010

Rising Consumer Sentiment Buoys Market

The market is slightly higher again in early trade, despite the numerous calls for a pullback in this area. The University of Michigan consumer sentiment report helped this morning, when it came in at 74.2, it's highest level since June.

The dollar is a bit higher today, which is weighing on commodity prices. Oil is hovering near $88.25, while gold has pulled back to $1375.

Asian markets were mixed overnight, with China higher after reporting strong export growth figures (+34.9%). China's central bank announced that it raised the reserve requirement ratio for banks by another 50 basis points, as it looks to try to reign in inflation.

Last night, F5 Netorks (FFIV) and Netflix (NFLX) were both added to the S&P 500, so index fund managers are buying those stocks and both are higher today.

Among the sector ETFs, healthcare (+0.55%) is leading so far, while materials (+0.03%) are lagging. But all 10 sectors are positive.

The 10-year yield is up a bit today to 3.25%; and the VIX index is still at the low levels of 17.35.

Trading comment: The growth leaders continue to hold up well, and break further into new high territory. Coinstar (CSTR) looks poised to move higher; Valeant Pharma (VRX) looks to be completing a short cup-and-handle breakout; Sandisk (SNDK) is surging higher so far; and the list goes on.

Bullish sentiment continues to climb, which as I mentioned yesterday is a yellow flag. And while it will likely matter at some point, I am mindful of the fact that sentiment is a secondary market indicator, while price and volume action are your primary indicators. The trend is your friend.



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