Monday, February 27, 2012

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


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