Monday, April 02, 2012

Monday Morning Musings

The market opened slightly lower this morning on the first day of the new quarter, but has since rallied back into positive territory.

Asian markets were mixed, while Europe is mostly higher this morning. We got a host of PMI manufacturing data from overseas, with some conflicting data out of China. The official government PMI reading rose to 53.1 from 51.0 last month. But the private PMI figure for China from HSBC fell to 48.3 from 49.6 previously. If I had to choose, I tend to side with the PMI figures since my gut says there is less smoothing going on there than the govt. figures.

In Europe, France posted its weakest PMI in 32 months (46.7) while the UK posted its strongest reading since May (52.1). But overall for the eurozone the PMI was only 47.7, which still indicates contraction for the region.

In the U.S., the ISM Manufacturing index rose to 53.4 in February from 52.4 the prior month, indicating still healthy growth for that sector.

In corporate news, Groupon (GRPN) shares are lower after reporting a revision to its Q4 results. Avon (AVP) shares are higher after reports that French beauty company Coty is submitting a bid to acquire Avon for a 21% premium to Friday's close.

The euro is lower this morning, but that is not hurting most commodities. Oil prices are higher near $103.50. Gold prices are also higher around $1682, and copper and silver prices are higher as well. The silver etf (SLV) is up nearly 3% so far today.

The 10-year yield is lower to around 2.17%; and the VIX is flattish near 15.40.

Trading comment: We often see this action in the beginning of a new quarter/month were funds get put to work, but I think the key action will be later this week when we see if there is any follow-through. If the indexes break to new highs that will obviously be a good sign, but if they are unable to and we see further distribution that could be a clue that we are due for a bigger pullback. I want to tread lightly at this juncture, especially as we approach Q1 earnings season.


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