Wednesday, February 13, 2013

The Slow Grind Continues

The markets are higher again in early trading as the slow grind higher continues.  The S&P 500 is making new highs near 1525, about 50 points away from its all-time highs.  For the Nasdaq 100, it is still about 100 points shy of its 52-week high.  People don't talk about the all-time highs for the Nasdaq, at least not in polite circles.

In economic news, January retail sales rose +0.1%, and +0.2% excluding autos.  That was slightly better than expected, but below last month's reading of +0.5%.

In corporate news, Comcast announced it will buy the remaining stake in NBC Universal owned by GE for $16.7 billion.  Earnings season also continues to wind down, but quite a few companies still reported last night and this morning.

Stocks rising on earnings:  CMCSA, TRLA, ASPS, MSA, PGR, LO, VMI

Stocks falling on earnings:  RAX, MRK, AMX, DPS, DE

Asian markets were mixed overnight.  India and Australia rose, Japan fell, and Hong Kong and China remained closed for the holiday.  The Australian Chamber of Commerce expects the Reserve Bank of Australia to cut rates again due to weak business and consumer confidence.

European markets are also mixed.  Bank of England governor Mervyn King said he expects the country's inflation rate to climb to 3.0% this year, but that it will not result in looser monetary policy.

The dollar is roughly flat and commodities are mixed to lower.  Gold prices are weaker again down to $1644, while oil prices are holding up around $97.75.

The 10-year yield is bouncing near the 2.02% level.  It has still not broken above January's highs of 2.03%.

The VIX is up +2% today but still stuck near the 13.0 level.

Trading comment: There isn't all that much to add to our recent comments about the market.  The slow grind higher appears to continue to drag money into the market from the sidelines.  Bullish sentiment is hovering near levels that in the past have market short-term tops for the market and preceded pullbacks.  At this point it's hard to see the catalysts for such a pullback.  Some expected one to come after the State of the Union address, but so far there isn't much selling.  We continue to buy stocks if they are breaking out of well defined consolidations, but are also trimming some positions that have had big runs and holding some cash for if and when we ever get a pullback.  One thing that is a bit worrisome is that the view that we are due for a pullback is becoming very consensus, and we know that the herd is rarely accurate at predicting short-term market trends.


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