Wednesday, June 13, 2012

Still Holding The Recent Range

The market dipped in early trading but is currently attempting to bounce from those levels and get back into positive territory.  Yesterday's trading showed solid price action with good volume.

In economic news, retail sales fell by 0.2% in May, and fell 0.4% when you exclude auto sales.  Also, producer prices declined 1.0% in May, while core producer prices rose 0.2%.  So really the big declines came from food and energy prices.

Overnight action in Asian was generally positive, while Europe's bourses are lower today.  Yields among eurozone countries are mixed, and the euro is getting a bounce relative to the dollar.

Commodities are mixed.  Oil prices are higher near $83.85 and gold prices have bounced to $1623.  Copper prices are lower so far.

Jamie Dimon, the CEO of JPMorgan, is testifying before the Senate Banking Committee this morning about their trading losses.  I find these kind of things somewhat laughable.  Most of the folks on the panel don't understand the banking activities of a large money center bank like JPM.  I would bet that the same types of activities take place in all of the large banks.  I'm not sure Dimon needed to disclose it in the manner in which he did in the first place.  And I'm sure he regrets it now as he has been called to Washington to testify about a trading loss.

So far today, healthcare stocks are leading the action while materials and industrials are lagging.

The 10-year yield is down a touch to 1.64%.  And the VIX is up +5.5% to 23.35.  The VIX seems like it is up quite a bit relative to the flat action in the major indexes.  Normally I would view this as a red flag on the day.  But sometimes in expiration weeks you get a day or two where normal correlations/signals get skewed.

Trading comment: Yesterday's action was generally positive.  It was not quite big enough to qualify as the IBD-style follow through day I have been looking for since last week.  The biggest missing ingredient is the number of fresh breakouts by leading stocks.  Most market leaders are still in the midst of forming corrective bases in their stock action and not yet ready to breakout to new highs.  So I am not yet ready to materially increase our long exposure to stocks.  The SPX has held that 1307 level nicely the last several days, and it wouldn't surprise me to see another push higher in the senior index.  But we also have the 50-day average looming overhead, which is now downward sloping and should offer resistance if and when it comes into play.

KAM Advisors has long positions in JPM


Post a Comment

<< Home