Monday, March 12, 2012

Monday Morning Musings

The markets are slightly lower in early trading, and there isn't a whole lot in the way of market moving news this morning.

Asian markets were slightly weak overnight. China posted larger than expected trade deficit and that has caused some to speculate that global demand for China's exports isn't as strong as it has been in recent quarters.

The dollar is relatively flat this morning, but most commodities are lower. Oil prices have eased back to $105.75 and natural gas is lower to $2.37. Gold prices are back below $1700 to $1697. Copper and silver prices are lower as well.

The financial sector which has been leading recently is the day's biggest laggard so far, while defensive utilities have resumed the lead.

The 10-year yield is sitting right at that 2.00% level that I keep mentioning. And the VIX is down a whopping -10% today new lows. It hasn't been this low $15.35 since July 2011. Of course that was before last summer's swoon which saw the VIX triple from the 15 level. A colleague told me that some of the weakness is due to traders rolling their positions to the new front month options, but I don't think that could account for all of this large decline.

Trading comment: I keep saying that hasn't been a great strategy to wait for the market to take a rest and then look to buy on the weakness. A better bet has been to simply focus on your individual stocks and add to them on weakness, which has come periodically more as a result of sector rotation than an overall market correction. Last week, the market experienced a brief 3-day pullback but that was quickly followed by some buying. That has left the S&P 500 just a few points away from its recent highs at 1378. Since every pullback has been quickly followed to a return to new highs, one would expect the SPX to surpass 1378 shortly. If it doesn't that would be a notable change in character. Of course, the Nasdaq has been up for 10 straight weeks so I would think a down week is coming at some point. But again, I am focused on the action in individual names. And AAPL continues to be a monster.

KAM Advisors has long positions in AAPL


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