Monday Morning Musings
The markets are higher in early trading, after Friday's enthusiasm carried over into Asian markets. Asian markets rose overnight and also got a boost after the PBOC in China suggested that it would ease monetary policy in the back half of the year and vowed to help bolster the economy.
In Europe, regulators in Greece over the last week cited progress on its efforts. European markets are higher this morning.
In earnings news, CTSH matched estimates and slightly raised full-year guidance. Expectations had been pretty low for the company and as a result the stock popped over 12% at the open.
In other corporate news, the founder of Best Buy (BBY) submitted a proposal to buy the company for $24-26. But its unclear if he will be able to get all the financing and actually go through with the private buyout.
Among the sector ETFs, financials are leading the early action followed by materials. Utilities are lagging the most, followed by healthcare stocks.
The 10-year yield is slightly lower near 1.55% following Friday's spike higher. As for the VIX, it had gotten so low on Friday that even this morning's rally can't push it lower, as the VIX is up +3.7% this morning to 16.22.
Trading comment: Don't fight the tape is an old Wall St mantra. This market has certainly been choppy, but it has also been putting in a series of higher lows and higher highs since its June bottom. Today the S&P 500 nearly touched the 1400 level, which would be the highest level since early May. The one knock on this market is that it has been led more be defensive issues like utilities, staples, and healthcare as opposed to the traditional growth stocks likes tech and consumer discretionary. But if we start to see more classic growth stocks breaking out it could be a sign that this rally has legs. Many market participants are also leery of chasing a market at this point in the year, since seasonal patterns often lead to a correction in the Aug.-Oct. timeframe.
KAM Advisors has long positions in CTSH