Monday, June 04, 2012

Looking For The Elusive Bounce

The markets are mixed in early trade after opening slightly higher but quickly fading back into negative territory.  The first hour dip was relatively shallow and the indexes are trying to make a stand.  The Nasdaq has moved back into positive territory while the S&P 500 is still a few points shy.

The disappointing non-farm payrolls report on Friday really took the wind out of the sails of this market.  I thought folks would have already be expecting a poor jobs report, but the figures turned out weaker than most expected.

The selloff on Friday probably weighed on Asian when it opened last night, as markets there fell across the board.  China dropped -2.7% after the country's services PMI fell to 55.2 from 56.1 the prior month.

Newsflow in the US is very light today, with no big corporate or economic reports to speak of.  Hopefully that will provide a backdrop for stocks to bottom and try to put in some upside reversal today. 

The dollar is lower today after its big recent rally.  Commodity prices are mixed.  Oil prices are slightly higher near $83.45.  Copper prices are higher as well.  But gold prices are lower to $1618 and silver prices are down as well. 

The 10-year yield is higher today after plunging to breathtaking generational lows last week.  The 10-yr currently sits at 1.50%.  Some folks think yields could drift lower, which is always possible, but I think the TBT trade (short Treasuries) is looking pretty good.

As for the VIX, I would like to see it start moving lower.  It nearly hit 27.75 this morning but is currently back down near flat for the day at 26.70.  The days lows are 25.75.

Trading comment: Friday's plunge took the SPX right down to its 200-day moving average, and even a bit below.  The SPX is currently trading at 1276 vs. the 200-day average that sits near 1284.  So my first wish would be to see the SPX retake that 1284 level and its 200-day.  Sentiment has gotten pretty bearish with the put/call closing at 1.37 on Friday.  So we should be setup for a bounce, even as the macro backdrop remains chock full of negative headlines.  June brings another Fed meeting as well as the Greek elections, but hopefully we won't have to wait all the way until those events occur to see some action.

KAM  Advisors has long positions in TBT


Post a Comment

<< Home