Monday, April 22, 2013

Monday Morning Musings

Markets were higher only briefly after the opening bell today, but have since slipped back into negative territory.  The Nasdaq is still slightly higher thanks to AAPL and MSFT which are both higher today.

In economic news, March existing home sales hit a rate of 4.92 million units which was below expectations.  Homebuilding stocks are weaker today on this news.

Earnings reports continue to roll in, and it will be a busy week this week.  Probably the biggest report investors are waiting for is AAPL on Tuesday evening.  A few stocks trading higher this morning after report earnings include HAL, BEAV, and SIX.  Stocks trading down after earnings are CAT and PHG.

Asian markets were higher across the board overnight.  China was flat after reporting that non-performing bank loans rose 20.7% in March.  Japan rallied 1.9% after the G20 meetings failed to accuse the country of devaluing its currency.  In Taiwan, the unemployment rate held steady at 4.2%.

European markets are also higher today after Italy finally elected a president, 87-year old Giorgio Napolitano.  Elsewhere, ECB members have commented that the ECB could cut rates further if economies continue to deteriorate.

The dollar is a bit higher this morning and commodities are mixed.  Precious metals are higher with gold trading up to $1420.  But copper prices are lower again.  Oil prices are also down a bit to $87.90, and ag prices are lower today as well.

The 10-year yield is down to 1.68%, testing last week's low of 1.67%.  And the volatility index bounced from that 15 level that we have been citing  to 15.80 currently.

Trading comment: The market gave back its early gains, but so far the selling pressure hasn't been to great.  It will be a battle today with bulls trying to defend the SPX 1550 level and bears trying to push it back below its 50-day average (now near 1544).  As to whether the market still has more work to do in this most recent correction, we are leaning towards that being the case.  But we are also mindful of the fact that a LOT of investors have been looking for any pullback to put more money to work in equities, so it wouldn't be all that surprising if these folks got impatient and started buying sooner rather than later.

KAM Advisors has long positions in AAPL


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