Monday Morning Musings

Back in the saddle after some time off last week for spring break with the kiddos.  Time to shake off the cobwebs and get back in sync with the market.  The S&P 500 closed at new highs at the end of last week as the stairstep pattern continues.

The market started off the new quarter this morning slightly higher, but has since faded into negative territory after some weaker than expected economic data.  The March ISM manuf. index slipped to 51.3 vs. expectations of 54.0.

Economic data was also disappointing in Asia overnight, and led to some declines.  Japan's Tankan index fell to 6 (vs. 8 consensus) and China's manuf PMI came in at 50.9 vs. expectations for 52.0.

Markets across Europe remain closed for the Easter holiday.

The dollar is lower today, but commodities are mixed.  Oil is trading lower near $96 after reports that Exxon had to shit its Pegasus pipeline due to a leak.  Gold prices are firm, and hovering under the $1600 level.  Silver and copper prices are lower.

The 10-year yield was higher briefly but has turned lower and is testing last week's lows near 1.83%.  The volatility index is 10% higher so far near the 14.0 level.

Trading comment: It seems portfolio managers continued to put money to work right into quarter end and that helped boost the S&P 500 to a new closing high.  But today that strength has not carried over, at least so far.  We could see dip buyers surface again before the close.  Often times we see buyers come in on the first day of the new quarter.  Last quarter was one of the best in decades for stocks, so a repeat is unlikely in Q2.  Also, we have not seen much at all in the way of corrections in the market since last winter.  We think there is a good chance we get a deeper pullback sometime this quarter, but of course the timing of such is always the trickiest.  Some of this could come down to where we are in terms of investor sentiment.  I need to do a roundup of all the indicators we track, and will report updates during the week.