Early Look: RIMM Disappoints

The market is roughly flat in early trading. The dollar hasn't gained any traction, and commodities are moving higher again. Oil prices are above $113, and gold prices have reached new highs at $1544.

In earnings, Catepillar (CAT) reported strong earnings and raised guidance, and its stock has hit new all-time highs this morning. It is also helping to boost the industrial group.

On the downside, RIMM gave disappointing guidance last night, and lowered estimates, resulting in the stock getting pummeled for -13% so far. We moved entirely out of RIMM several months ago after concluding that they were going to continue to lost market share to Apple (AAPL) in both the retail and the all important corporate market. Today that is looking like a great call.

Asian markets were mixed overnight; the 10-year yield is flat near 3.30%; and the VIX is also flattish around 14.60.

Trading comment: Earnings reports continue to come in better than expected for the most part, and the number of stocks making new highs expanded yesterday. This shows broadening participation in this new upleg, which is a bullish sign. You can find leading stocks from a variety of sectors, helping investors stay diversified.

long AAPL, CAT

Happy Anniversay To 'In The Money'

Today is the 6th Anniversay of the 'In The Money' blog. We started blogging on April 28, 2005, when very few people had blogs.

Since that time, we have posted over 2,800 entries and tried to help investors make sense of the markets and hopefully make money.

In the coming months, we are planning a refresh for the site, with a new look, updated links of interest, and more content to help readers become better investors and better stewards of their finances and capital.

So thank you to all of our readers!

Sincerely,
-Jordan Kahn

Bernanke Gives Markets The Green Light

The markets are hovering near the flat line in early trading, but closed on a very strong note yesterday after the FOMC meeting and Bernanke's press conference. Bernanke basically gave the green light to the markets by indicating that QE2 will continue into the end of June, and at that time the Fed will continue to reinvest maturing proceeds, which basically means it will maintain the size of its large balance sheet.

This was an indication to the market that monetary policy will remain accomodative, and that was a signal to buy equities, commodities, etc. There was nothing in his comments to indicate any tightening coming, and as such there has been no rally in the dollar.

Commodities continue to run, with oil prices back to $113, and gold prices up to new highs at $1535. But silver has had the most amazing run of all lately, and is nearing all-time record highs at $49 today. The chart of silver looks like it has gone parabolic, and does not appear sustainable.

Earnings reports continue. On the plus side, stocks that are higher after earnings include PEP, AET, and FTNT. A few disappointments on the earnings front are XOM, AKAM, and PG.

In economic news, advance GDP for Q1 was released today and came in slightly above estimates at 1.8%. That is a big slowdown from last quarter's 3.1% spike, but it was widely expected and is also expected to pick up in the second half of the year.

The bond market is hinting at more slowing, with the 10-year yield trading down to 3.31% today; the VIX is also lower, back below the 15 level to 14.78.

Trading comment: Yesterday's action was very bullish, as Bernanke gave the green light to investors. The market closed at new highs for the year also. So for the near-term, I want to be a buyer on dips and add to all of our favorite names when we get opportunities. I do think we will have the normal summer correction, but at this point I have no idea if it will come in May, June, or later. So let's not put the cart before the horse.

Fed Lowers GDP Forecasts

The FOMC released its statement today, in which is slightly lowered its outlook for GDP growth for the next few years. But it also raised its employment outlook, and now sees the unemployment rate falling below 7% by the end of 2013.

Here are the current forecasts compared to their last forecasts in February:

GDP Forecast
Apr- 2011: 3.1-3.3%; 2012: 3.5-4.2%; 2013: 3.5-4.3%; Long Run: 2.5-2.8%
Feb- 2011: 3.4-3.9%; 2012: 3.5-4.4%; 2013: 3.5-4.6%; Long Run: 2.4-3.0%

Unemployment Forecast
Apr- 2011: 8.4-8.7%; 2012: 7.6-7.9%; 2013: 6.8-7.2%; Long Run: 5.2-5.6%
Feb- 2011: 8.8-9.0%; 2012: 7.6-8.1%; 2013: 6.8-7.2%; Long Run: 5.0-6.0%

PCE Inflation Forecast
Apr- 2011: 2.1-2.8%; 2012: 1.2-2.0%; 2013: 1.4-2.0%; Long Run: 1.7-2.0%
Feb- 2011: 1.3-1.7%; 2012: 1.0-1.9%; 2013: 1.2-2.0%; Long Run: 1.6-2.0%

Core PCE Inflation Forecast
April- 2011: 1.3-1.6%; 2012: 1.3-1.8%; 2013: 1.4-2.0%; Long Run: N/A
Feb- 2011: 1.0-1.3%; 2012: 1.0-1.5%; 2013: 1.2-2.0%; Long Run: N/A

In the Q&A Bernanke held afterward, he tried to give clarity on things like the term "extended period". He said the FOMC isn't sure how long that means, but at least a few more FOMC meetings.

When asked about Fed policy hurting the dollar, Bernanke said the Fed believes in a stable dollar. He said their intent to keep inflation stable and promote maximum employment should help the dollar longer-term.

All Eyes On Bernanke Today

The market is slightly lower in early trading, after a nice rally yesterday that took the major indexes to new, multi-year highs. Volume is likely to remain light this morning ahead of the FOMC statement from the Fed. Also, for the first time Chairman Bernanke will hold a press conference after the meeting to answer questions. I think every trader will be watching his comments.

Earnings reports continue to pour in. Among the positive reactions were Boeing (BA), Wellpoint (WLP), Devry (DV), and a surprising bounce in Acme Packet (APKT). On the downside were disappointments from Broadcom (BRCM) and Conoco Phillips (COP). Another company that missed earnings was Amazon (AMZN), but after falling in after hours trading last night, the stock has rallied strong and is up 4% today.

In economic news, durable goods orders for March were better than expected, rising 2.5%.

Asian markets were mixed overnight. Japan rose despite S&P downgrading their outlook on Japan debt to negative. Europe was higher this morning.

The 10-year yield is bouncing to 3.36%; and the VIX is 4% higher to 16.31.

Trading comment: Energy and materials stocks are weak this morning, which could be an opportunity to add to positions. Healthcare stocks are mostly higher, while tech is mixed. Most people think that the market is likely to selloff after Bernanke's comments today. I certainly see their point, but as we know, often when everyone is looking for the same reaction from the market it usually fails to materialize. Regardless, I will wait to see how the market trades later in the day before deciding to put money to work today.

long APKT, WLP

Stock Market Makes New Recovery High

The markets are rallying this morning, pushing the S&P 500 and Nasdaq to new recovery highs. The S&P 500 topped at 1344 on Feb. 18th before settling into a correction. Today, roughly 10 weeks later, it has broken above that level and moved into new high ground. This should spell a new upleg for the markets.

There was another round of positive earnings reports last night and this morning, with positive reactions from the likes of ITW, UPS, MMM, and Ford (F) - to name a few. A couple of disappointments came from Coca-Cola (KO) and Netflix (NFLX).

There was also a solid Consumer Confidence report, with April coming in at 65.4 vs. 63.8 last month.

Asian markets were lower across the board overnight amid concerns of further interest rate hikes in China.

Morgan Stanley downgraded the commodity sector this morning, which would be adding to the selling. Gold prices are slightly lower to $1501, while silver prices have pulled back nearly 4%. Oil is only slightly lower near $112.

The 10-year yield is lower again to 3.34%; and the VIX is down -3.6% today back to 15.20, a low level.

Trading comment: The market's uptrend seems firmly back on track now, with the market making new highs again. I am looking at many of the industrial leaders that are still off their highs, and are likely to be back at new highs shortly. I like names such as EMR, DE, CAT, and FLR. I also think a stock like LVS could play catch up, even though I usually like to stick with the market leaders. On that front, I expect AAPL to rejoin the list of leaders soon.

long AAPL, EMR, DE, CAT, FLR, LVS

Monday Morning Musings

Good Monday morning. Hope everyone had a nice holiday weekend. I was out of town for my kids' spring break, so still shaking off the cobwebs a bit. But market action towards the end of last week was very solid, and there were lots of strong earnings report.

Of course, I was particularly pleased to see the action in Apple (AAPL). The company trounced earnings estimates, and the stock reacted nicely. I still think AAPL has considerable upside left. I was also very surprised by the action in FFIV/VMW. I did not expect them to report such strong numbers.

The newsflow today has been light. Asian markets were mostly lower overnight, led by China, with Hong Kong closed for holiday. All of Europe's markets remain closed for holiday observance today.

The dollar is roughly flat. Oil prices are lower to $111.25, but gold prices are still a bit higher near $1504. Barrick Gold (ABX) is lower today after reporting an acquisition in the copper industry, leading some to ask "if ABX is looking to buy copper assets, does that mean they see a peak in gold prices?"

The 10-year yield is a little lower, still hovering near the 3.36% level. And the VIX is bouncing back +8% today to 15.96, after hitting multi-year lows last Wed. and Thurs.

Trading comment: The market showed strong price/volume action last week, and more leaders are breaking out after reporting earnings. As you know, my mantra is to stick with those leaders as opposed to trying to bottom fish with companies that have disappointed. We are still in the thick of earnings season, so be careful buying ahead of company reports. Wireless networking stocks look strong (APKT, ARUN, MERU), with APKT reporting earnings tomorrow.

long AAPL, APKT, MERU

Mixed Action Despite Solid Earnings Reports

The market is mixed in early trading, with the S&P slightly higher while the Nasdaq is barely negative. There have been a lot of earnings reports to come out last night and this morning, and the reactions in stocks reporting has been fairly mixed.

Texas Instruments (TXN) and Seagate (STX) both missed estimates, and that is weighing on chip stocks and the tech sector at large.

Among banking stocks, Goldman Sachs (GS), Northern Trust (NTRS), and US Bancorp (USB) all reported solid earnings reports, but their stocks have traded lower since reporting. Sentiment for the financial group remains tepid at best, and most of the stocks in the group remain in corrections.

On the plus side, JNJ finally reported an improved outlook, and its stock has really popped higher. Also, transportation stock PCAR is up nicely after reporting earnings.

Asia's markets were lower across the board last night, led by a 1.9% decline in China. The 10-year yield is a bit lower to 3.36%. An the VIX is back down to 16.70. The VIX spiked 20% higher early yesterday, but faded as the session wore on and gave back most of its gains.

Trading comment: We added to many of our favorite names yesterday, starting with the more blue-chippish ones: VNO, DE, EMR, SRCL, AAPL, CTSH, IBM, etc. As for the more aggressive growth stocks we follow, I like to wait a bit longer for the correction to run its course, and then identify which ones are the first ones to break out hint to investors that they could lead any next leg higher.

long VNO, DE, EMR, SRCL, AAPL, CTSH, IBM

Monday Morning Musings

Happy Monday. I looked at the futures before I went to bed last night and things looked calm. But this morning the news came out that Standard & Poor's issued a negative outlook on U.S. debt ratings, and that really hit the market.

It shouldn't be that big of a surprise, given the high levels of debt the U.S. currently has, but investors don't like to hear any negative news regarding U.S. debt. Interestingly, bond yields remain flat on the day, and the dollar is actually higher due to the 'flight to safety' trade that is on today. Gold prices are also benefiting, up to $1493, while oil prices are falling back to $107.

If we weren't talking about the U.S. debt ratings today, the focus would be back on European sovereign debt, where the CDS spreads are blowing out again. Greece's are at new record highs amid speculation they might need to restructure their debt. Also, we have talked about tightening monetary policy in China. Over the weekend, the PBOC raised their reserve requirement ratio another 50 basis points in response to rising inflationary pressures. The risk of a hard landing in China is increasing.

There were a couple of positive earnings reports this morning, with Citi (C) and Halliburton (HAL) reporting strong results. But the selling pressure is too strong right now, and those stocks too have given up their early gains. The volatility index, which hit a new multi-month low on Friday, is spiking +21% so far today back to the 18.65 level.

Trading comment: We said with the major averages below their 50-day moving averages that the markets were in a defensive position. But I want to use this weakness to start putting a little money to work. We know from past pullbacks that the plan is to put cash to work in stages. The reason you have to put some to work on the first leg down, even if you expect more weakness, is that about a third of the stocks will bottom on a day like today. And since you don't know which ones exactly, you have to start picking at names you like and adding a little. And although tech has been out of favor, if we didn't have such big positions in Apple (AAPL), I would be adding to it here. long AAPL, HAL

S&P Holds Steady Despite Some Earnings Misses

The market is slightly higher in early trading, despite some earnings misses from a couple of market bellwethers. Google (GOOG) was the big one. The company's revenues were solidly above estimates, growing 27% from year-ago levels. But as I feared, spending at the company was way too high, and EPS came in below estimates. So the stock has gapped below its 200-day average, down a little more than 6% currently. I suspect that GOOG will be in the penalty box for a while, but longer-term this will likely prove to be a good buying opportunity.

Bank of America (BAC) also missed earnings but beat on revenues. Overall, the report looked pretty solid. The stock started off the day higher, but has since moved into negative territory. Overall, financials are up a bit.

Overnight, China announced its Q1 GDP came in at 9.7%, a healthy rate. But inflation is moving higher, with the CPI rising 5.4%, up sharply from Q1 last year when it was 4.9%. The PPI is also a lot higher at 7.3%. China closed with a 0.3% gain last night.

Oil and gold prices are on the rise again also. Oil prices are up today, back to $109. And gold prices are making a new record high at $1485.

The 10-year yield has fallen back to 3.41%; and the VIX is down 3% to 15.77, but these low levels look like they may be affected by today's options expiration.

Trading comment: The Nasdaq is heavy today after Google's earnings report. Defensive sectors like utilities and healthcare are leading the action. Energy and materials are faring okay also. So far, earnings season has not produced any eye-popping winners. Let's hope next week's batch of reports brings some more positive action. The S&P 500 has recaptured its 50-day average so far today. A close above this key moving average would be a small win for the bulls heading into the weekend. Rest up.

long BAC, GOOG, GLD

Google On Tap

The market is lower in early trading, led down by the financials. Weekly jobless claims were a bit weak this morning, which didn't help sentiment. The weakness started overseas, with most Asian markets slightly lower. But the selling picked up steam in Europe, where their markets experienced larger declines. The S&P 500 came down near the 1300 level this morning, but has since bounced a bit since then. Trucking company JB Hunt (JBHT) reported solid earnings and its stock has spiked to a new high. It always nice to see one of the transportation stocks breaking out, as that is a positive tell on the economy. Tonight we will hear from Google (GOOG). I think they will report good numbers, as search activity has been strong and all of the news events like Libya, Japan, etc. only lead to higher Internet traffic and more searches. The wildcard is that GOOG has been on another hiring binge recently, and also implemeted a pay raise this quarter. So higher operating expenses could take some of the upside off. But if I were new CEO Larry Page, I would want to put up a very good number for my first quarter as CEO. Commodities are higher again, with oil rising to $107.85, and gold prices back near $1470. The 10-year yield has eased back to 3.47%; and the VIX is up a mere 2% to 17.25. Trading comment: The major indexes have been struggling to hold their 50-day averages, which puts them in a weak position. I'm anticipating just a mild pullback this time around, given that we just finished a full 7% correction in the SPX. So I want to use upcoming weakness to add to positions, focusing on those stocks showing strong relative strength and those who reported solid earnings last quarter (if they haven't reported this quarter yet). long GOOG

Oil Bends, But Does Not Break

The market is bouncing a little this morning, after a solid earnings report from JPMorgan (JPM), and an okay retail sales report. Oil prices had a big drop yesterday, but today they're back hovering near $107.20. I think if we could see oil continue to trend lower, even if it stays near $100, the market would rally as at least the persistent trend of ever higher prices would be snapped. Gold prices are also higher, back to $1460. Financials as a group are lower so far, but JPM is higher after reporting a solid earnings report. The company also reaffirmed its plan to raise the dividend and authorize a $15 billion share repurchase program. In other earnings news, Riverbed Tech (RVBD) raised guidance last night in a surprise move. Many investors were worried about weakness in the networking group, but RVBD said that its WAN business was very strong. Also bouncing on the news is Aruba Networks (ARUN), which is up 10% so far. Retail sales for March came in at +0.4%, in-line, but sales for February were revised higher as well (+1.1%). Asian markets were higher across the board overnight, and Europe was higher this morning. The 10-year yield is up a bit to 3.51%; and the VIX is down -3.5% currently to 16.48. Trading comment: JPM and RVBD were both good news, and should improve sentiment relative to yesterday. Energy stocks are also bouncing today. I think Google (GOOG) will have a big effect on trading, and they report tomorrow. I'll be covering the call for RealMoney.com, and will post a copy of my comments on Friday. Volume has been light lately, and feels that way today also. Let's see if this early strength sticks, as its still early in the session. long ARUN, GOOG, JPM

Have The Wheels Come Off The Energy Train?

The market is lower in early trading, led down by the energy sector. But that is just one of the factors being cited for the weakness. Last night, Aloca (AA) led off earnings season with a mixed report. Earnings were solid, but revenues were a little light and the stock was met with selling. Today, it's stock is down -5%. Overnight, Asian markets traded sharply lower after Japan raised the nuclear crisis level to a maximum level of 7 (from 5) after data indicated that more radiation had leaked from the damaged reactors than first estimated. That makes this the worst nuclear disaster since Chernobyl. On the energy front, Goldman Sacks (GS) is being credited with calling for a substantial pullback in oil prices, and urging its clients to take profits. This is spurring heavy selling in the energy sector. Oil prices have fallen back below $106, while gold prices have pulled back near the $1450 level. The energy sector is down twice as much as the next sector (materials). Consumer staples stocks (food, restaurants, etc) are holding up the best so far. The 10-year yield has pulled back to 3.49%; and the volatility index (VIX) is spiking sharply today, up 11% to 18.44 (still below its 50-day). Trading comment: I have been talking about the market working off its overbought condition, but action like today will have people start asking how quickly we can be back towards oversold. The S&P 500 is just breaking below its 50-day average, while the Nasdaq is handily below its 50-day. If these technicals levels aren't recaptured by the end of trading, traders will likely adopt a more defensive stance in the near-term. The drop in oil prices is a positive for the consumer and the economy, if it sticks, but today it is causing so much profit taking in the energy and materials sector that it is weighing too heavily on the market. I think we need some good earnings reports followed by strong action in those stocks to boost bullish sentiment here.

Monday Morning Musings

The market is slightly higher in early trading as we get reading for earnings season to kick off this week. Alcoa (AA) will be first out of the gate tonight, but later this week we'll hear from JPMorgan, Bank of America, as well as Google (GOOG). There was a little bit of M&A activity over the weekend. In a blast from the past, Global Crossing (GLBC) will be taken over by Level3 (LVLT) for a 50% premium to Friday's closing price. Also, American Medical (AMMD) will be acquired by Endo Pharma (ENDP) for $30 a share, a 30% premium. The dollar is up a little today, which is weighing on commodities. Oil prices are down slightly near $111.90, but have been up almost every day in recent weeks. Gold prices are also lower, trading around $1468. Asian markets were lower overnight, while Europe was mixed this morning. The 10-year yield is higher to 3.59%; and the VIX is down a whopping 7% to 16.50. Trading comment: Market leading stocks have really been showing mixed action recently. AAPL and GOOG have been lagging, so it will be interesting to see how GOOG responds to earnings later this week. AAPL reports next week. Energy stocks held up the best last week, while healthcare fared nicely as well. Financials and industrials pulled back the most. But for the year, so far, energy is leading the pack by a wide margin, while technology is lagging. A pullback in oil would probably give the market a boost, while a continued climb towards $120 could weigh on sentiment. As for the avoidance of a govt. shutdown, I don't think the markets were all that focused on it. long AAPL, BAC, GOOG, JPM

Quote of the Day

"In the long run, men hit only what they aim at. Therefore… they had better aim at something high." — Henry David Thoreau: author, poet, naturalist, and philosopher

Govt. Tries To Avoid A Shutdown

The market is trading flattish so far this morning, opening slightly higher but falling back below the flat line since then. CNBC is airing Capitol Hill and the effort to avoid a govt. shutdown today, but I don't think this has a big impact on the markets today. Weakness in the dollar is supporting commodities, which is where the action has been all week. The CRB Index is up roughly 1.3% for the week, compared to the S&P 500 which is exactly flat. Oil prices are higher again today, topping the $110 level and reaching $111.33. Gold prices are also up again, hitting $1471. Corn, wheat, and soybean prices are also rallying. Asian markets were higher overnight, despite another earthquake in Japan. The Nikkei actually rallied +1.9%, a very strong showing. The 10-year yield is breaking above its recent trading range, hitting a one-month high at 3.59%. And the VIX is flat near 17.14. Other than that, there is not much market moving news today. Energy shares are higher so far, and leading the market, while financials and industrials are lagging. Trading comment: I expect today's action to be fairly lackluster. Oil prices remain too high for a big rally to ensue. But at the same time, we have seen the market bend a couple of times this week, but not break. My guess is that we close down slightly on the day. But as I have said, this isn't a bad setup as we head into earnings season next week, and should make for some better buy setups. Google (GOOG) reports next Thursday, and with the stock pulling back as much as it has, I think shares should react favorably barring any surprises in their earnings announcement. We will also hear from some of the biggest banks, like JPMorgan (JPM) and BofA (BAC). long BAC, GOOG, JPM

ECB First Out Of The Gate To Raise Rates

It's cloudy this morning looking out over the Hollywood hills, but I'll take that over Japan where another 7.4 earthquake just hit. My heart goes out to those folks, although it has been reported that this one was out at sea (250 miles from Tokyo) and no damage has been cited in the mainland. Newsflow is relatively light this morning. The big news event came from the ECB in Europe, where the central bank raised its target interest rate for the first time since mid-2008, to 1.25%. The Bank of England held their rates steady. I think the ECB is being premature with this rate hike, but they want to show markets they are serious about inflation. Retail sales for March came out this morning, and were mostly better than expected. With rising gas prices, few investors are bullish on consumers and retailers, but many of the stocks continue to climb the wall of worry. BBBY also reported earnings, which were better than expected, and the stock has gapped to a new high. The dollar is flattish today, and so are most commodities. Oil prices are flat near $108.90, while gold prices are up a bit around $1464. Asian markets were up slightly overnight; the 10-year yield is down at 3.53%; and the VIX is up 2% to 17.26. Trading comment: Still working off the overbought condition. Many market leaders slumped yesterday, and are mixed this morning. Next week earnings season starts, and I think investors will take their next cue from earnings reports. I expect another good quarter overall, but those stocks that disappoint or give tepid guidance will likely get hit. If the market pulls back a little bit as we head into earnings season, it is probably a better setup than if we continued to rally into earnings.

China Shrugs Off Rate Hike

After two flat days in the market, we are seeing a bounce higher in early trading. The S&P 500 has traded as high as 1339, just a few points away from its earlier highs this year. Technology shares are leading the early action, while basic materials stocks are lagging. One of the reasons materials stocks may be lagging is that oil prices keep moving higher. Crude oil prices are hovering near $108.50, lofty levels to be sure. Precious metals prices are also higher, with both gold and silver making new highs. Gold is up to $1462. Asian markets were mostly higher overnight, with China bouncing 1.1% after being closed for a holiday. China hiked rates for the fourth time in six months, pushing the loan rate to 6.31%. I am still worried about a hard landing in China, and have not bought back any of our China etf (FXI) that we sold earlier this year. There are no economic reports to speak of this morning. And next week all eyes turn to earnings season. The 10-year yield is higher at 3.52%; and the VIX is down 2.8% to 16.75. Trading comment: Sector rotation continues, with tech taking the baton today, but energy and materials have received most of the love lately. The leaders list is somewhat random in that no one industry is heavily weighted. I guess that's why they call it a stock pickers market. ISRG is adding to its recent breakout, while CPL has stalled after its big rise. Yesterday we trimmed our positions in the biotech etf (XBI), which has also ramped quite a bit lately. I'll look to put these proceeds back to work on more of a pullback. long CPL, ISRG, XBI

Chart of the Day: Gold

The chart below shows today's breakout in gold prices. The pink line represents what had been resistance around the $1435 level. But that level was broken today in convincing fashion. As long as the dollar remains weak, gold prices should remain firm. But I do worry that at some point, when the Fed starts to raise rates, that late-to-the-party gold bulls could be in for a world of hurt. We just aren't there yet. long GLD

The Budget Process Is A Joke

The graph below shows just how inconsequential the proposed budget cuts really are. It's hard to see how this situation gets better in the near and intermediate-term.

Working Off The Overbought

The market was lower in early trading, after a weaker than expected economic report, but it has since bounced back into positive territory. In economic news, the ISM Services index came in at 57.3, which was below estimates and also down from last month's reading of 59.7. This led to a brief selloff in stocks. In corporate news, Texas Instruments (TXN) said it will pay about $25 per share to acquire National Semi (NSM), a premium of almost 80% to last nights closing price. This news has the semi index, and most chip stocks, trading higher. Overnight, Hong Kong and China were closed for a holiday, but China's central bank still announced another 25 basis point rate hike for its 1-year deposit and lending rate. Japan was down -1.1% overnight. In Europe, the markets are lower after Moody's followed other agencies in downgrading the debt of Portugal. Today we also get the minutes of the latest FOMC meeting at 2pm EST. I expect to hear more of the same, that QE2 will run its course, the Fed will hold rates low for the near-term, that inflation is not too big of a concern at the moment, and that the economy is slowly gaining steam. Trading comment: The market was roughly flat yesterday, and is starting off that way today. Sometimes after the market gets overbought (see yesterday's chart), it merely consolidates in a sideways fashion while working off this overbought condition. This would be bullish action, and likely lead to further upside after a pause. Some stocks have simply risen too far, too fast. Yesterday we trimmed our positions in MELI for just that reason. long MELI

Monday Morning Musings

The market is roughly flat in early trading, with the Nazz down slightly due to heaviness in AAPL, GOOG, and a few others. The economic and corporate newsflow is relatively light today, and the markets come into the day's session at overbought levels. The chart below shows that the Nazz is actually more overbought than it has been in many months. The dollar is roughly flat, and precious metals are moving higher. Gold prices are up near $1437, while silver prices are 2% higher above $38.50. Oil prices are also hovering near 2-year highs at $108. Asian markets were mostly higher overnight, with China closed for a holiday. But China's service PMI came in at 60.2, which is up sharply from February's 44.1 reading, so that should be a boost. The 10-year yield is lower to 3.41%; and the VIX is 1.5% higher to 17.67. Trading comment: We continue to see more breakouts amongst leading growth stocks. But the old generals like AAPL and GOOG continue to lag. I showed the chart of the oscillator above, which shows how overbought the market is currently. As such, I would expect some backing and filling as we head into earnings season next week. I expect earnings to be solid again, and would go back and look for those stocks (I will try to highlight some) which beat estimates handily last quarter and reacted well. They could have a repeat performance. long AAPL, GOOG

Market Hitting New Highs On Solid Jobs Report

The market is rallying again in early trading, with some indexes hitting new highs for the year. Some of the buying could be first day of the month and quarter new money coming in, but the action is solid nonetheless. While the S&P 500 and the Nasdaq are still below their Feb. highs, the Dow, the S&P mid-cap index, and the Russell 2000 small-cap indexes have all surged to new highs for the year. So I would expect the S&P 500 and Nasdaq to play catch-up. This morning's jobs report was pretty solid. The economy added 216,000 jobs in March, which is better than the 185k economists were looking for. The unemployment rate fell slightly to 8.8%. If the economy can keep adding 200k+ jobs each month, this recovery should remain on solid ground and improve consumer sentiment. In corporate news, the ICE and Nasdaq (NDQ) have announced their rival bid for the NYSE (NYX) of about $11.3 billion. That is roughly a 19% premium to the offer made by Deutsche Boerse. Asian markets were mostly higher overnight, except for Japan. China's manufacturing PMI came in at 53.4, which is higher than last months 52.2. But more and more stories are surfacing about China's inflation problems. Oil prices are higher near $107, while gold prices are down today, back to $1422. The 10-year yield is higher to 3.48%; and the VIX is falling -7% back to 16.50. Trading comment: The indexes are moving higher, and the list of stocks breaking out continues to grow. Here are some more names to add to the list:

• MELI, ISRG, TIBX, WYNN, VRX, CMG, DE, CTSH, LSTR, TSCO, BIDU, SRCL, etc.

Earnings season will start soon, and I expect earnings to be good for the most part. But if stocks keep rallying into earnings reports, we could see some sell on the news reactions. But let's not get ahead of ourselves. Right now, the action is very positive. long MELI, ISRG, VRX, DE, CTSH, LSTR, SRCL