Stair-stepping To New Highs
The markets are once again making small moves to new highs after a brief pause on Friday that saw some light selling pressure. We have called this the stair-step market because each time the market moves to new highs, it seems to then move sideways for just a bit before taking the next step and moving higher again. This pattern has persisted since the start of the year with very little pullback to offer investors a better buying opportunity.
This morning's only real economic report was the NAHB Housing index which slid to 46 from 47 last month. But it didn't have a big effect on the market.
One sector that is taking it on the chin today are the health insurers which are selling off after the Centers for Medicare and Medicaid proposed lower co-payments for 2014.
Asian markets were mostly lower overnight. The G20 meetings came and went with little fanfare. The Japanese finance minister said the central bank has no plans to buy foreign bonds.
Europe's markets are mostly higher this morning after the German ZEW Economic survey spiked to 48.2 vs. expectations of 35.0. The ZEW survey for the Eurozone also came in better than expected at 42.4. Separately, the French foreign minister said the country's 2013 GDP growth target will likely be cut by 50 basis points to 0.2%-0.3%.
The dollar is roughly flat today but most commodities are lower. Oil prices are slightly weaker near $95.75 and gold prices are down near the $1600 level. Silver prices are also lower and copper prices are down over 2%.
The 10-year yield briefly touched 2.05% last Thursday before reversing lower. It is currently holding at the 2.00% level.
The VIX is up 2% to 12.75 today, still a low absolute level that is not indicative of an immediate pickup in volatility.
Trading comment: We really have no big changes to our recent comments. We continue to trade around our positions in terms of trimming stocks that have had outsized moves higher, while also looking for fresh breakouts in stocks that look ready to run. We have trimmed some of our bond etf exposure, but prefer to wait for the inevitable pullback before adding to our equity allocations in a more meaningful way.