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