Thursday, October 25, 2012

Japan Adds To Recent Stimulus Program

The markets are higher in early trading, although the early strength is already beginning to fade.  There is still a lot of time left today, so we will have to see if there is any late day strength that shows up.

In economic news, durable goods orders surged back from last month's -13.1% decline to increase 9.9% in September.  Ex-transportation durable goods rose 2.0%.

10-year yields are getting a bounce on the data, with yields reaching 1.81%.

It was another big night and morning for earnings reports.  I haven't seen any big standouts the way CAT, etc. made the headlines.  But there are certainly lots of sharp reactions in the stocks.

Stocks rising on earnings: BG, BIIB, ASPS, RS, RCL, DLX, COP, PCP, MCK, AKAM, SRCL, PG

Stocks falling on earnings: CAB, FFIV, CLF, SWI, MJN, SHW, DFT, FFIV, NOV, UA, JAH

Asian markets were mostly higher overnight.  The Bank of Japan announced another round of stimulus to the tune of 400-700 billion JPY.  The Nikkei rose 1.1%.  But talks of fiscal package in China did little to boost their market, which fell -0.7%.

Europe is also higher this morning on the heels of a positive GDP report from the UK.  GDP rose 1.0% in Q3, but likely got a boost from the Olympics which should fade next quarter.

The dollar is flattish, oil prices are flat near $85.75, and gold prices are higher to $1717.  Copper prices are lower again, and are not trading as if China is rekindling growth.

Trading comment: The major indexes have not been able to muster much of a bounce the last couple of days, despite being short-term oversold.  I think it is likely we will see a short-term bounce soon, but it will probably still be too soon to buy.  I would prefer to wait for the market to pull back again after any bounce and see if it can find some firm support.  That would be a better bottoming process from which to launch a more sustainable rally.

KAM Advisors has long positions in SRCL, PG


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