Thursday, February 09, 2012

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


At 11:52 AM, Blogger said...

As a Brit living in the States for now, I read the Telegraph constantly. Here is the latest: Every little twitch in one direction or another sends the Euro soaring or plunging. My personal opinion is that everyone in Europe - despite what they may say - are terrified of Greece failing and hence keep throwing money at the problem. This then triggered some sense in my mind along the lines of "where have I heard or seen something like that before?" Voila! I found it!:

"If you owe your banker a thousand pounds, you are at his mercy. If you owe your banker a million pounds, he is at your mercy."
-- John Maynard Keynes


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