Monday, January 09, 2012

Getting Ready For Earnings Season

There isn't a whole lot in the way of market moving news this morning. After the close today Q4 earnings season will kick off with Alcoa (AA) reporting. I don't know that many people that key off of this report, but it is still the official start to earnings season.

Overnight Asian markets rallied led by China's 3% spurt higher. There were positive comments from Chinese leaders along with rising expectations for easing monetary policy after data showing an increase in lending and money supply. This is somewhat odd given the Premier's cautious comments last week, but nothing is normal when it comes to gauging China.

In early trading, financials (XLF) are leading the way while healthcare (XLV) stocks are lagging.

The euro is getting a little bounce vs. the dollar, and commodities are mixed. Oil prices are lower near $100.90 despite increased rhetoric with Iran. And gold prices are a bit higher to $1620. Silver prices are also higher, while copper looks lower right now.

The 10-year yield is flat around 1.96%. And the VIX is getting a bounce from Friday's low levels, currently 3% higher to 21.30.

Trading comment: Most of the major indexes are now above their respective 200-day averages, and have held those levels for more than a couple of days. I still think this bodes well for another push higher. The market is overbought short-term, which could be a headwind this week. I don't like taking large positions in new stocks ahead of earnings, but we do continue to trade around our long positions with an upward bias. We are still long most of our recent trades, including SCSS, ULTA, and STMP. AAPL shares remain our largest position, and the shares briefly hit a new all-time high this morning. Despite the high price tag, AAPL shares do not yet appear close to being overvalued.

KAM Advisors and/or clients are: long AAPL, SCSS, STMP, ULTA


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