Monday, June 06, 2011

Monday Morning Musings

After 5 straight down weeks, the market has opened lower again. That said, I still feel like a bounce is in order this week.

Financials are very weak this morning, after banks sold off hard in Europe following pessimism over any Greek bailout and the potential hit euro banks could have to take.

There has been no major corporate or economic news this morning to move the markets, so catalysts are lacking. The ASCO meeting over the weekend will keep the focus on drug and biotech stocks in the near-term. And the Apple (AAPL) developers conference will be the big news later today, where CEO Steve Jobs is expected to make an appearance.

Asian markets were mixed overnight; Hong Kong and Shanghai were closed, but Japan was lower after Tokyo Electric Power could see losses of up to $7 billion and may be looking at bankruptcy protection.

The dollar is up slightly today, while oil prices have fallen back to the $99 level. Gold prices are higher, topping $1550 again.

The 10-year yield is up near 3.02%; and the volatility index is 2% higher to 18.31.

Trading comment: The market feels very heavy this morning, but I still expect a lift this week. The put/call ratio hit an extremely high level of 1.24 on Friday, and averaged 1.06 for the week. That's a pretty extreme bearish level. The ISEE sentiment index was equally bearish. So after 5 down weeks, and the markets back at oversold levels, I would look for a reprieve.

That said, the indexes remain below their 50-day averages, QE2 is ending, and the summer slowdown is upon us. So I would look to use any upcoming weakness to sell or trim non-core positions, and continue to build up a more defensive posture that will help investors weather continued choppiness in the market.

long AAPL


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