Euro Banks Flock To Cheap LTRO Money

The market was higher in early trading, but unlike most recent sessions we have seen the early gains reversed and as of this post the major indexes are trading in the red. If the day plays out like many before, the market should regain its footing into the close. If not, it would mark a rare change of character for this market.

The big news out of Europe was the latest round of cheap money offered to banks over there via the ECB's LTRO program. This time around more than 800 banks lined up to participate with the ECB lending a total of 530 billion euros. This figure was slightly above estimates and slightly above the first round of LTRO when 489 billion euros were lent.

Hopefully the large liquidity injection will be put to productive use and help the banks shore up their balance sheets. As for the sovereing debt issues in Europe, you can't really solve debt problems with more debt but I do view this as a type of kicking the can down the road scenario. In that sense, it gives the markets more time to price in the fiscal realities and gives the banks more time to reposition their books. So purely as an investor I like the program.

In economic news in the U.S., Q4 GDP was revised higher to +3.0% from a previous estimate of 2.8%. Also, the Chicago PMI came in better than expected at 64.0 vs. 60.2 last month. This continues the streak we have seen of strong readings in the manufacturing sector.

Stocks up on earnings: AH, ITT, COST, FE, CPRT, VRSK

Stocks lower on earnings: SODA, LIZ, JOY, SPLS, FSLR, PANL

Despite the LTRO, the euro is lower this morning and that is weighing on commodities. Gold has staged a big downside reversal so far and its trading down to $1730. Oil prices are also lower near $105.75.

The 10-year yield is getting a bounce near the 2.00% level. And the VIX is only up 2% so far to 18.30.

Trading comment: Today has the makings of a down day for once, but with dip buyers at the ready another positive close wouldn't surprise me either. Materials stocks are down the most today, while defensive consumer staples are bucking the weakness so far. Lots of stocks look extended on their charts, so a pullback or at least some consolidation would be constructive to allow these stocks time to trade sideways and build another base. It's hard to see the current pace of advance in the market continuing without a breather.

KAM Advisors was long FE, SODA

Consumer Confidence vs. The Bond Market

The market is higher again in early trading. Pullbacks continue to be brief affairs and the stock market mocks those calling for an imminent correction.

The strongest piece of economic data today was the Conference Board's Consumer Confidence index which spiked to 70.8 in February from 61.5 last month. That's a big jump and we also saw a rise in the Univ. of Mich consumer confidence index earlier in the month.

So it's safe to say that consumers are becoming more upbeat about the economy. We know from the relentless rise in the stock market that investors are becoming more upbeat about the market as well. But what doesn't translate is what is eating at bond investors?

The 10-year yield continues to drift lower, now back down to 1.90%. If the bond market were even a tad more upbeat about the economy and global markets, I would expect the 10-year to have already reached 2.5-3.0% levels.

Some would argue that the Fed is skewing this indicator with their operation twist buying. But this is a very deep market, and the Fed can only effect things at the margin. They can't fully absorb a global selloff in Treasuries, if and when we ever get one. In the meantime, the 10-year yield remains an outlier in terms of improving sentiment indicators.

The rebound in the housing market hasn't shown up yet in the Case-Schiller figures. This index fell another -4.0% in December, even though its data lags a bit. We will have to see if the index picks up as it starts showing 2012 figures.

On the earnings front, I see more stocks gapping higher on positive reactions to earnings. The poster child today will be Priceline (PCLN), but also take a look at SINA, DPZ, and AZO to name a few. On the disappointing reaction side are SWN, TECD, and FDP.

Commodities are mixed so far. Oil prices are a bit lower near $108, while gold prices are higher to $1785 and copper and silver prices are up even more (on a percentage basis).

The VIX is flattish around the 18.15 level.

Trading comment: Yesterday we trimmed our longs in SODA, but the stock continues higher today. Google (GOOG) is also moving back above its 50-day average, which is a good sign. Tech stocks are leading the early action while defensive utilities (last year's winners) continue to lag. With the markets up as much as they are since the October lows, I would expect to see some larger increases in bullish sentiment in the advisor surveys, but we haven't seen the extreme readings yet. Maybe this week will begin to show more bullishness.

KAM Advisors was long GOOG, PCLN, SODA

Monday Morning Musings

Last week I called this market the Groundhog Day market, and this morning that notion is repeating itself again. Go figure.

The market was lower in early trading, but dip buyers have quickly stepped in and the major indexes are already back in positive territory. As we near month-end, I sense performance anxiety setting in. And I would expect it to become more pronounced as we get closer to quarter-end.

In economic news this morning, pending home sales for January increased 2.0%, above expectations. The homebuilding stocks are reacting positive to the news, as well as positive comments from Warren Buffett about the housing market.

Asian markets were mostly lower overnight, and Europe is lower this morning. G-20 officials met over the weekend, and indicated that additional financial safeguards are needed in Europe before additional funds are made available from the IMF.

Stocks rising after reporting earnings: LOW, CTB, and VRX.

Stocks falling after earnings: DNDN, KWK, BRK/B

The euro is lower, with mixed effects on commodities. Gold prices are slightly higher to $1780, and silver and copper prices are higher as well. Oil prices are down a bit, but still high on an absolute level at $108.80.

The 10-year yield is fading further back down to 1.93%; and the VIX is 3% higher to 17.80.

Trading comment: I haven't seen any definitive news, but the positive reaction in ESRX and MHS this morning hints that the FTC might be looking favorably at the merger. Industrial stocks are leading the early bounce, while defensive utilities are lagging. Priceline (PCLN) reports earnings tonight after the quarter, and the stock is trading at new highs going in. Other stocks trading at new highs today include AAPL, MELI, COH, MA, MNST, and SCSS is very close.

KAM Advisors has long positions in AAPL, COH, ESRX, MA, MELI, MNST, PCLN, and SCSS

Groundhog Day In The Markets

The markets are slightly higher in early trading. It seems like I am posting the same comments every morning, in a groundhog day like scenario for the markets lately. The major indexes are up a bit, one sector takes over the lead while another takes a breather, a handful of stocks gain on earnings, and a few new breakouts get added to the list. I don't know how long the pattern can continue before something comes out of left field and smacks investors upside the head, but for now we'll continue to focus on what's working and try to maximize profits.

In earnings news, stocks sporting positive reactions: MELI, MNST, AIG, and CRM. MELI was actually down last night after reporting, but by the time the market opened this morning investors were back in a buying mood. Stocks showing declines after reporting include ADSK and NEM to name a couple.

In economic news, the Univ. of Mich consumer sentiment survey improved to 75.3 in Feb. from 72.5 last month. New homes sales came in better than expected at 321,000 units in January, although that figure was slightly below the previous months level.

Asian markets were higher overnight, led by a 1.2% bounce in China. Europe is higher this morning as the concerns surrounding Greece calm a bit.

The euro is also getting a bounce at the expense of the dollar, while commodities are mixed. Oil prices are higher again near $108.15. Copper prices are also higher, but gold prices have eased back near $1775 and silver prices are slightly lower as well.

The 10-year yield is back below the 2.00% level, despite the improving economic data. It is very hard to tell how much of this is the Fed buying bonds to keep a lid on rates. Normally I would have expected the 10-yr to drift higher by now.

The VIX continues to drift lower also, down close to the 16.50 level this morning.

Trading comment: It's very hard to buy stocks that have broken out to new highs or that have gapped higher after reporting strong earnings. But those seem to be the stocks that are leading the market so far this year. One way to get comfortable with this is to buy a half position in stocks breaking out with the idea that you can add to your positions on a pullback. I remember buying a half position in JDSU in 1999 and it turned out to be one of my best trades ever. I'm not comparing this environment to 1999 but rather trying to highlight a strategy of staging your buys into growth stocks.

KAM Advisors has long positions in MELI, MNST

Europe Economies Still Sluggish

The market is mixed in early trading, having started out in negative territory but currently trying to work its way back to the flat line.

Asian markets were higher overnight after China's manufacturing PMI increased to 49.7 from 48.8 last month. This figure is still below the key 50 level which marks the difference between expansion and contraction.

Europe's markets are lower today after its eurzone manufacturing PMI index inched up to 49.0 from 48.8 last month. But that 49.0 reading still points to contraction. Additionally, Greece had its credit rating downgraded again by Fitch and its market swooned by 5%. In England, some officials at the Bank of England have called for additional stimulus measures.

Stocks rising this morning on earnings include: FIRE, INTU, HSTM, and GRMN to name a few. Stocks declining on earnings are DELL, MGM, CAKE, DLTR, and CLH.

The euro is lower this morning, and most commodities are lower as well after a big up day yesterday. Oil prices are flat near $106; gold prices are slightly lower to $1756; silver prices are lower also, while copper prices are flat.

The 10-year yield is steady near 2.04% and the VIX is up slightly to 18.50.

Trading comment: Call me crazy, but I don't have much hope that the market will give underinvested bulls the pullback they are hoping for. Nothing has been able to knock down this market. Earnings misses have been shrugged off, options expiration was yawn, overbought readings were worked off effortlessly, and the Greek bailout dealings look like more of a distraction than anything. Look at AAPL-- that high volume reversal didn't lead to any follow-thru selling and the stock is back at new closing highs. Stocks have continued to stairstep higher, with sector rotation keeping any one group from seeing prolonged weakness. At some point we will surely have a correction, but waiting for it has been a losing strategy. I still think adding to leading stocks on pullbacks works best. Trying to invest in the year's laggards will likely continue to be frustrating.

KAM Advisors is long AAPL

Monday Morning Musings

The market is higher again this morning after Greece reportedly agreed to terms to receive its latest round of bailout funds to prevent it from defaulting on its debt. European markets are mostly lower this morning seeing a sell-the-news type of reaction to Greece.

Asian markets were mixed overnight, despite Chinese officials decision to trim the reserve requirement for banks.

More companies are reporting earnings this morning. Stocks rallying on their earnings reports include HD, M, and SKS to name a few. Stocks seeing disappointing reactions to earnings are WMT, CIEN, EXPD, and GPC.

The bounce in the euro is weighing on the dollar but helping commodities. Oil prices reached $105 this morning; gold prices have rallied back above $1755, and silver and copper prices are higher as well.

Energy and materials stocks are leading the early action, while defensive consumer staples and healthcare stocks are lagging.

The 10-year yield is higher to 2.05% near the top of its recent trading range. The VIX is also higher by 1.75% to 18.10 which is a little odd given the early gains in the market.

Trading comment: The Nasdaq finished last week higher marking the 7th consecutive week of gains. I went back to look for the last such streak and had to go back to the spring of 2010 to find one. Back then, the Nazz actually posted 8 straight weeks of gains but then the markets endured a sharp 10% correction over the next 2 weeks. I'm not saying the same thing will happen this time around, but the market remains overdue for more than just a one-day pullback like we've seen. That said, it has paid this year to focus more on individual stock than the overall market. The action in leading stocks continues to be strong.

Are Bond Yields Poised To Move Higher?

The market was higher in early trading, but has since given up those gains and is slightly in negative territory. The S&P 500 is down less than the Nazz so far, as financials and industrials are leading the early action while biotechs and other large-cap tech are lagging.

The yield on the 10-year note has moved above the 2.00% level by just a bit. The 10-year first fell to the 2.0% level last August and has been trading in a volatile but sideways fashion for the last six months. With economic datapoints improving, I would expect the 10-year yield to move a little higher despite the fact that the Fed is likely still buying long-term bonds.

Stocks trading higher after reporting earnings include AMAT, CPB, and HNZ to name a few. Stocks falling in reaction to earnings are BIDU, JWN, GIS, and HMSY.

Asian markets were higher overnight. The euro is also higher this morning, despite the fact we have no definitive news regarding the Greek debt situation.

Commodities are mixed. Oil prices are higher and have traded above $103; gold prices are slightly lower near $1724. Copper and silver prices are lower as well.

The VIX recently bounced off of its overhead 50-day near the 21.50 level but then moved sharply lower. Today it is down another 5.5% back to 18.15. At the time of the spike, I surmised it might have been exacerbated by this week's options expiration, which finishes today. So we will have to see if traders reload on puts next week and volatility spikes again.

Trading comment: The relentless march continues. The market has hit 9-month highs this morning. Growth stocks look to be subject to some profit taking today, but I don't expect it to last long. I still think the strategy of buying leading stocks on pullbacks will outperform, and by leading stocks I mean those that recently reported strong earnings and have been breaking out to new highs.

KAM Advisors has long positions in GIS

Financials Shrug Off Potential Moody's Downgrade

The markets are higher once again in early trading. Yesterday the market paused and gave back some ground, but it wasn't a big down day by historical standards. The market seems to be consolidating its recent gains in more of a sideways fashion as opposed to a meaningful pullback.

Today's news out of Moody's about potential downgrades in the financial sector are being shrugged off by the market. In recent months, this sort of news would have hit stocks and dragged down the financials. This goes to show how forgiving investor sentiment is currently.

In economic news, jobless claims came in better than expected for another week. And the Philly Fed survey was also better than expected coming in at 10.2 for February from 7.3 last month.

Earnings reports are a big of a mixed back this morning. While most folks focus on which companies beat or missed estimates, I like to also look at how stocks are reacting to earnings. This can give investors a good sense of how much of the prior quarter was already priced into stock prices.

Stocks rallying after reporting earnings include: GM, DUK, ASPS, and VFC. Stocks declining on earnings are: CBS, APA, MAR, CF, and WM to name a handful.

Asian markets were lower overnight, and Europe is lower today on continued concerns about Greek debt talks. The euro is also slightly lower today relative to the dollar.

Commodities are mostly lower as well. Oil prices are flattish near $101.75; gold prices are down near $1720; silver and copper prices are also lower on the day.

The 10-year yield is getting a bounce to the 1.97% level. And the VIX is down fractionally to 21.0 after a big rise in volatility yesterday.

Trading comment: Yesterday's action was completely colored by the action in AAPL. The stock is down further today, but it is now keeping the overall market down. Industrials are leading the early action, while healthcare stocks are lagging. Sector rotation continues and I still would look to add to stocks that recently gapped higher after reporting earnings if you can buy them on a dip. Those stocks should continue to lead the market.

KAM Advisors has long positions in AAPL

Will China Support Europe?

The markets are nicely higher this morning after a big rally late in the day yesterday reversed the earlier losses from the session.

Asian markets were higher overnight after comments from a China official that hinted at the country looking to increase its investment in the eurozone. This also appears to be helping European markets this morning, even as the euro is lagging. A couple of GDP reports out of Europe showed that Q4 GDP declined -0.2% in Germany but rose +0.2% in France. Both were a little better than expected.

In the past Chinese officials have said they are not looking to increase their investment in the troubled eurozone. So this would be a bit of a change, although we would still have to see what any involvement looked like. My guess would be they are more inclined to invest directly in companies over there, especially natural resource companies, as opposed to simply lending to over-indebted governments.

In earnings news, positive reactions to earnings reports continue to trump negative ones. The list of stocks rallying after earnings includes: CMCSA, TEVA, MET, WCG, ANF, DF, DVN, and VMI. The only major stock trading down after earnings is Deere (DE).

In economic news, the Empire Manufacturing index for Feb. rose to 19.5 from 13.5 the prior month. The Housing Market index also improved in Feb. to 29 from 25 in January. These are small datapoints that continue to line up on the side of the ledger that supports a continued improving economic outlook in the U.S.

Commodities are mostly higher today. Oil prices are higher again near $101.70; gold prices are higher to $1733; silver prices are also higher, while copper prices are lower so far.

The 10-year yield is up just slightly to 1.94%; and the VIX is up +5% right now to 20.56. The higher VIX today is a bit odd given the gains in the market, and could be related to positioning ahead of this Friday's options expiration.

Trading comment: The action in stocks continues to be very positive. The list of those looking for a correction continues to grow. I even had a client call me yesterday and ask if we should be looking for a correction. Alas, it's never that easy, is it? AAPL just crossed the $500 mark on Monday and its already testing $525 today. The list of market leading growth stocks also continues to broaden, which is a marked change from 2011 when defensive stocks like utilities and consumer staples fared the best.

KAM Advisors has long positions in AAPL and DE

Moody's Downgrades More European Countries

The market is lower this morning in early trading, but if the recent pattern continues then that would mean that the dip buyers will appear at some point and the market will close in positive territory. I'm not saying that will happen, just that has been the pattern in recent weeks.

Yesterday the market cheered the Greek austerity package. But today there is a slightly different tone after Moody's downgraded the countries of Spain, Italy, Portugal, Slovakia and Slovenia. Moody's said these countries as being susceptible to the growing financial and macroeconomic risks.

There was another handful of earnings reports out last night and this morning. On the upside are a couple of standounts such as RAX and KORS. On the downside are stocks such as BWA, UTHR, CPLA, and GT. FOSL had started out lower in reaction to earnings, but has since reversed higher on strong volume.

In economic news, retail sales for January rose 0.4%, which was below expectations. But the ex-autos figure was 0.7% which was higher than consensus estimates and above last month.

Asian markets were higher overnight after Japan announced that it has expanded its asset purchase program.

The dollar is higher this morning, and most commodities are slightly lower. Oil prices are higher near $101, gold prices are flat around $1725, but copper prices are lower.

The 10-year yield has started to drift lower to 1.94%, which is right around its 50-day average. The VIX is up nearly 5% to just under the 20 level.

Trading comment: Healthcare stocks are leading the action this morning. Nearly all of the healthcare stocks I follow on my screen are bucking the early weakness. ESRX is acting better, shaking off last week's rumors about its acquisition. ISRG is surging to new highs. While we often focus on how "the market" is doing overall, this year could yield better results for those who focus on individual stocks.

KAM Advisors has long positions in BWA, ESRX, GLD

Monday Morning Musings

The market is higher this morning on relative light newsflow other than the headlines out of Greece. Greece's parliament has approved the new austerity measures it needed to accept in order to get its latest round of bailout funds.

The news has helped push European markets higher, as well as the euro. Asian markets were also higher overnight. But there is very little in the way of domestic economic data out this morning or corporate earnings reports of any consequence.

Friday's action saw one of the first selloffs of the year, but so far the action has not carried over this morning. Financial stocks are strongest so far, while defensive stocks like utilities are lagging.

The dollar is lower and most commodities are higher. Oil prices are up near $99.70, gold and silver prices are up slightly, while copper looks to be lower right now.

The 10-year yield is flattish around 1.96%. And the VIX is down -5.7% so far to 19.61 after a big spike higher on Friday that took the VIX all the way up to touch its overhead 50-day average.

Trading comment: The stairstep higher action continues. Most stocks have given little reason to sell them, and growth stocks continue act better than their defensive counterparts that led for most of 2011. Investor sentiment continues to grow more bullish, but has still yet to reach extreme readings that in the past have led to sharp selloffs. One anecdotal sentiment call was this weekend's Barron's cover, which said Dow 15,000 on it. Such bullish cover stories in the past have often coincided with bullish sentiment nearing some sort of peak.

Greece: Buy The Rumor, Sell The News?

The market is slightly lower in early trading despite rumors circulating that a deal has been made between Greece politicians on the austerity measures. I have to wonder if we will see the classic buy the rumor, sell the news reaction. By that I mean that the market has been running higher on the perception that a Greek deal was in the works. Now that we might actually have an official deal, the market could be ready to take a breather.

There was another large handful of earnings reports last night and this morning. Stocks trading higher after reporting earnings include: ALXN, V, AKAM, SCSS, and PM. Stocks trading lower on earnings reports are CSCO, NWSA, PRU, and PEP to name a few.

In economic news, weekly jobless claims fell to 358,000. This was an improvement vs. last week's tally of 370,000.

Asian markets were mixed overnight. A key inflation reading in China came in above expectations. Europe's markets were slightly higher on Greek rumors, and the euro is also higher.

Commodities are getting a boost from the weaker dollar today. Oil prices are higher near $99.60, gold prices are up to $1750, and copper and silver prices are higher also.

The 10-year yield is rallying further, now up to 2.04%. And the VIX is 3% higher so far to 18.70.

Trading comment: Interesting action in AAPL lately. I'm not sure why the steady flow of funds into the stock. Of course, AAPL has been undervalued on a PE basis for a long time. So it could be that investors are suddenly willing to give it its due and a higher multiple to boot. I don't like the recent parabolic action in the stock. Maybe that's just the nightmares I still have about YHOO in 2000. But I would like to see AAPL make a more constructive base, or at least show an ascent on the chart that isn't so steep. I bet that's the first time you ever heard a money manager complain about making money, huh?

KAM Advisors has long positions in: AAPL, ALXN, SCSS, PM

Positive Earnings Reactions Continue To Outpace Negative Reactions

The market is slightly higher in early trading. For the first morning in awhile, there were no headlines out of Greece about progress or delays in its debt settlement talks.

Asian markets were higher overnight, led by China after the govt. raised gasoline prices and also provided support to the real estate market by instructing lenders to accommodate first time homebuyers.

In earnings news, positive reactions to earnings reports continue to outpace negative ones. Among the stocks rising after reporting are: TWX, DIS, CVS, AGU, IR, and the big ones of the day - RL and BWLD. Stocks declining after earnings include S, PNRA, and OPEN.

The euro is roughly flat this morning, and commodities are mixed. Oil prices are higher to $99.60, nearing the $100 level again. Gold prices are slightly lower nearing $1740. Silver prices are also lower, but copper prices are getting a boost.

The 10-year yield is rising further to 1.99%. The 2.00% level has acted like a magnet since early November. The VIX is flattish near the 17.60 level.

Trading comment: The stairstep higher action continues in the market. Those waiting for a pullback continue to be frustrated. This year is shaping up so far to be a year where it is proving more profitable to focus on individual stocks rather than the major indexes. I am focusing on those stocks that continue to show leadership and work their way to new highs. Also, stocks that have posted strong earnings and reacted positively should continue to act well. I think chasing laggards here in hopes of them playing catch up is a prescription for underperformance.

Will Dip Buyers Continue To Surface?

Lately it seems like every dip we've seen in the market has been quickly bought by folks looking to get more invested and put money to work in equities. With the market down slightly again this morning the question is will dip buyers continue to show up?

Earnings reports continue to garner positive reactions for the most part. The list of stocks moving higher after reporting includes: KO, SWI, HAR, PRGO, TDG, CSTR, APC, and YUM. A couple of stocks lower on their earnings reports are EMR and GSK.

Asian markets were lower overnight, led by a 1.7% loss in China. Europe's markets are also lower this morning amid continued delays in Greece's acceptance of austerity measures.

The euro is getting a bounce though, with the dollar lower. This is boosting commodities. Oil prices are back above $98 and gold prices are higher near $1735.

The 10-year yield is getting a nice bounce to 1.97%, poking just above its overhead 50-day average. For reference, the January highs were 2.09%. As for the VIX, it was higher earlier on but has since given up its earlier gains and is flat near $17.70.

Trading comment: Buy the dip remains the mantra that has worked so far this year. Investor sentiment continues to grow more bullish, but the indicators I follow are still far from levels that would indicate bullishness has reached extreme levels of too much complacency. Over the last few year, fund flows have been heavily tilted towards bond funds. It could be that we are beginning to see a reallocation out of some of those safety funds into investor allocations that are once again beginning to favor the growth side of the equation more. I know we are having those discussions at our firm, so it wouldn't surprise me to hear its going on at a lot of other firms as well.

KAM Advisors has long positions in EMR, KO, SWI, GLD, YUM

Monday Morning Musings

The markets are lower this morning on further delays with the Greek debt talks. Also, don't rule out the fact that the market had a very strong week last week, so some consolidation would be normal.

I called the Greek debt situation a yo-yo recently since we continue to see so much back and forth with the talks. Today it appears that Greece does not really want to implement the austerity measures as they have been laid out. I'm not sure how much wiggle room they have considering how badly they need the loans just to make their current debt payments.

There is little in the way of economic reports this morning. There have been a handful of earnings reports, but more of them are seeing negative reactions today. Stocks down after reporting include: HUM, SYY, LAZ, and SOHU. A couple stocks higher on earnings are HAS and BRO.

Asian stocks were mixed overnight. Japan was higher, but China was flat after the IMF trimmed its economic forecast for the country to 8.25% from 9.00% on weaker demand for exports.

The euro is lower and boosting the dollar. This is weighing on most commodities. Oil prices are lower to $97.25, gold prices are down to $1721, and silver and copper prices are also lower.

The 10-year yield is slightly lower at 1.92% after a nice pop higher on Friday due to the strong jobs report. The VIX is up almost 5% to 17.93 after plunging to a 7-month low on Friday.

Trading comment: With the market lower this morning, it will be interesting to see if dip buyers quickly step up again. The market is still overbought, but pullbacks have been few and far between. Friday's strong jobs report didn't help the bears at all, as it adds another economic indicator flashing improvement for the economy. New highs on the exchanges rose on Friday, and leadership in the stock market continues to broaden. This is another positive sign for the market.

Economic Data Much Better Than Forecasts

The market is rallying strongly this morning on a double dose of stronger than expected economic data. The first report was the monthly payrolls report, which showed the economy added 243,000 jobs in January. That was far greater than the 155k forecast. Private payrolls were also much greater than expected at +257,ooo vs. 168,000 consensus. Also, the unemployment rate fell to 8.3%.

The better than expected jobs report caused the futures to spike higher before the open. The market was only up slightly before the data was released. After the open, we got another dose of good economic data in the form of the ISM Services Index. The ISM rose to 56.8 in January, which was above expectations and also a nice increase from last month's reading of 52.6.

Earnings season continues to roll along as well. Among the stocks seeing positive reactions to their earnings reports are: TSN, WY, CLX, and APKT. A couple notable standouts on the downside this morning are EL and WYNN.

Asian markets were mixed overnight. The dollar got a boost from the jobs report, which is weighing on most commodities. Oil prices are higher to $97.13, but gold prices are lower near $1740, and silver prices are lower as well. Copper prices are higher on the strong economic data.

The 10-year yield is also getting a nice bounce. It is currently up 11 bps to 1.94%. As for the VIX, it has fallen another 6% and is now down at its lowest levels since last July (16.89). Do I smell a VIX trade coming?

Trading comment: Yesterday I mentioned the issue of performance anxiety, and today's action will likely put an exclamation point on it. Interestingly, the market also ran higher last year right into mid-February before experiencing a sharp 3-day correction. Guess what the high on the SPX was last Feb. before the correction? Answer: 1344. Guess what today's high is: 1343. Pretty similar. But the Nasdaq is doing much better, so I think the SPX can continue to play catch-up.

KAM Advisors was long CLX, GLD, SLV

Why The Facebook Halo Today?

There is a lot of hype surrounding the upcoming Facebook IPO. Given it's size ($100b mkt cap?) and the number of user Facebook reaches, I can understand all the hoopla. But I find it a bit confusing why today, after Facebook has filed its S1, that all of the other publicly traded social networking stocks would be trading so much higher. Look at ZNGA, LNKD, GRPN, etc. and you see big gains in all of them. I find the action odd.

In earnings news, we continue to see most reports beating expectations. This morning's list of stocks reacting positive vs. negative is fairly balanced, but the stocks showing positive reactions are up a lot more than the small declines on the stocks showing negative reactions.

Among the earnings gainers are: MA, GMCR, QCOM, LVS, and NUS. Stocks declining on earnings include: AZN, CAH, DOW, CI, CMG, and AGN.

The large number of disappointments coming out of healthcare related stocks is weighing on the sector, with the healthcare etf (XLV) lagging this morning by quite a bit. Energy stocks are up the most in early trading.

In economic news, jobless claims were slightly below expectations. Q4 productivity was in-line with expectations at 0.7%, while unit labor costs were higher than expected at 1.2%.

Asian markets were higher overnight, while Europe is mixed this morning. The euro has been bouncing around the flat line this morning. Oil prices are lower to $96.75; gold prices are higher near $1757; silver prices are also higher, while copper prices are flat.

The 10-year yield is flat near 1.84%; and the VIX is down another 2% to 18.18.

Trading comment: More breakouts to new highs today. Check out RAX. See V. MA is also close. View QCOM. Here comes MELI. Obviously AAPL. And I could go on. Those waiting for a dip remain frustrated, causing them to ask, "Dude, where's my pullback?"

KAM Advisors has long positions in AAPL, MELI, GLD, and SLV

Stocks Back In Rally Mode

The markets are nicely higher in early trade on a combination of solid economic data, good news out of Europe, and a bevy of solid earnings reports.

Europe's markets are higher today after a successful short-term debt offering in Portugal. Additionally, Germany, France, and the UK posted solid PMI manufacturing data. Asian markets were mixed overnight after one of China's PMI readings showed the sector still in contraction.

In terms of earnings reports here in the U.S., I like to look at how stocks are reacting to those reports. This morning we are seeing the number of stocks rallying on results significantly outnumbering those that are falling.

Among the positive reactions today are: BRCM, FTNT, STX, WHR, IACI, AET, TMO, and BEAV.

Declining stocks on earnings include: CHRW, AFL, and the big loser today - AMZN.

In economic news, the ISM Manufacturing index rose to 54.1 in January from 53.1 last month. Construction spending data for December showed a 1.5% rise, above expectations. The ADP payrolls report showed payrolls rose by 170,000 in January, but this was below the 200k figure economists were looking for.

The euro is getting a big bounce today at the expense of the dollar. This is helping commodities. Oil prices are up above $99 after falling hard yesterday. Gold prices are back to $1750. And copper and silver prices are higher also.

The 10-year yield is getting a small bounce to 1.83%. And the VIX is down -5% so far down to 18.45.

Trading comment: 'Don't fight the tape' is the mantra traders live by. So far this year, we have seen stocks stair-step higher and sector rotation keep the market moving up with few pullbacks along the way. Overbought conditions be damned. I often talk about performance anxiety among portfolio managers and I think the strong January we just had probably has most PMs caught flat-footed and looking for opportunities. One day we will wake up to a big enough selloff that it will make sense to step aside. But for the time being dips are being bought.

KAM Advisors has long positions in FTNT