Monday, December 10, 2012

Monday Morning Musings

Markets are slightly higher in early trading, led by healthcare stocks while financials are lagging so far.

Food stocks are getting a bounce after McDonalds (MCD) posted a better than expected +2.4% increase in global same store sales.  Expedia (EXPE) is lower after being the latest company to report a special dividend.  Normally a stock pops higher on this news.

In M&A news, Intermec (IN) is 22% higher after being acquired by Honeywell (HON) for $10 per share.  And Nexen (NXY) is 15% higher after getting Canadian approval  for the merger with Cnooc of China.

Apple (AAPL) was lower again in early trading but has since reversed off its lows and is inching its way back into positive territory, currently trading near $535.

Overnight Asian markets were mixed.  China outperformed with a 1.1% gain.  But Japan posted GDP contraction of -0.9%, marking its second quarter of contraction which puts it back in an official recession.

European markets are lower this morning after Italian PM Mario Monti announced his intention to resign.  Former PM Berlusconi has thrown his hat back in the ring to run again.

The dollar is up slightly, but not hurting commodities so far.  Oil prices are bouncing near $86.45.  Gold prices are higher to $1715.  And copper prices are higher as well.

The 10-year yield is a bit lower to 1.61%.  And the volatility index is higher by 2% so far near 16.20.

Trading comment: The S&P 500 is inching its way back above its overhead 50-day average.  We have been watching this key technical development, as it usually signals improved bullish sentiment among traders.  It seems odd to watch the market climb as we have all of this fiscal cliff discord in the headlines, but I guess that is the proverbial wall of worry that markets like to climb.  At least that is the case right now.  We still would not rule out the occurrence of a large selloff if and when markets get confirmation that no major deal has been reached and we begin to quantify what effects higher taxes, etc. will have on economic growth.  But for now the market is in the Alfred E. Newman mode of 'what - me worry?'

KAM Advisors has long positions in AAPL


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