Tuesday, April 10, 2012

Readying For A Bounce

The market is lower in early trading, which would mark a rare 5th consecutive down day for the major indexes if we closed at current levels. The S&P 500 is approaching its 50-day average near 1372, having hit 1375 earlier. Interestingly, the Dow, S&P mid-cap, and Russell 2000 are all already below their respective 50-day averages.

The Nazz is outperforming again, being helped by Apple (AAPL) which continues to defy gravity and trade higher to new record highs. Priceline (PCLN) is similarly spectacular but doesn't receive a fraction of the mentions in the media that AAPL does.

There hasn't been much in the way of market moving news this morning. Earnings season kicks off tonight with Alcoa, which is a bit of a bore if you ask me. Later this week we hear from Google, JPMorgan, and Wells Fargo which should all be interesting.

Action in Asia overnight was mixed, with only China gaining on the session after reporting an unexpected trades surplus (imports were weaker than expected). Europe is lower this morning as Italian and Spanish bond yields continue to rise.

The dollar is stronger vs. the euro, and most commodities are pulling back. Oil prices are lower below $102. Gold prices are down near $1638. Silver and copper prices are lower too.

The 10-year yield has once again fallen back below the 2.00% level as investors question the strength of our economic rebound. The VIX is up another 3% to 19.35.

Trading comment: The SPX is getting closer to its 50-day average and I am still expecting a bounce from these levels. Often times a pullback ahead of earnings season sets the market up well to rally if those earnings reports come in at or above expectations. I hope we get a good report from Google on Thursday, as that would help sentiment. The put/call ratio is fairly low this morning at 0.81. I would prefer to see more fear and a reading above 1.0 to help the market bottom. But yesterday we did see a reading above 1.0 by the close, the first such reading in a week.

KAM Advisors has long positions in AAPL, GOOG, PCLN, JPM, and WFC


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