Are You Looking For More Than A 2% Pullback?
The markets quickly shook off some mild weakness after the open and are currently in positive territory. Overnight action in Asian and Europe was lower, though not much in the way of impactful news.
Asian markets gave back most of the previous day's gains. There is still chatter about China's central bank easing, but who knows if and when. Meanwhile, HSBC lowered its China growth forecast for 2012 from 8.4% to 8.0%.
In Europe, Greece's PM is meeting with the German Chancellor. It will be interesting to see if he can persuade Germany to extend the timeframe for Greece to meet its commitments. Peripheral yields are rising today, with Spain's 10-yr at 6.49% and Italy up to 5.77%.
In economic news in the US, durable goods had a nice showing up +4.2% in July, up from 1.6% in June. Not bad.
In earnings news, Autodesk (ADSK) got hit by more than 20% overnight after missing earnings and lowering guidance, but it is bouncing back a little bit so far. Also, Salesforce.com (CRM) was lower overnight after a mixed report and guidance, but it has since climbed back into positive territory.
Commodities are mixed so far with the dollar index up slightly. Gold prices are down a little to $1671 while silver prices are higher. Oil prices are also up a bit near $96.65.
The 10-year yield is down a little to 1.65%. And the VIX is also 2.7% lower to 15.51.
Trading comment: From its intraday highs on Tuesday to this morning's lows, the S&P 500 has pulled back 2.0%. Sometimes in a normal uptrend that is about all an investor should expect from a pullback. A 2% pullback is often considered a pause that refreshes. The SPX has also drifted back to its 20-day average, where so far it looks to be finding support. So if you are bullish, you are probably buying this morning's dip. But there is still a lot of concern out there, and a lot of folks are still looking for more of a pullback before committing more cash. If I had to guess, I would probably fall somewhere in the middle with the thinking that we could just chop around in this general range for a bit longer before seeing another push to the upside. But it will be interesting to see how the market closes ahead of the weekend.