Monday, May 06, 2013

Monday Morning Musings

The market is slightly higher in early trading following Friday's big rally.  There is no notable economic data out today and overseas action was mixed. 

Overseas market action was mixed.  Asian markets were mostly higher overnight.  Hong Kong and China both gained over 1%.  China's HSBC Services PMI declined to 51.1 from 54.3. 

In Europe most markets are lower despite some improvement in the services PMI readings.  German, France, and Italy all reported services PMI readings higher than the previous month.  The overall Eurozone services PMI rose to 47.0 from 46.6.  But it still needs to get above 50 to move back into an expansionary reading (not contraction).

Among the sector ETFs, financials are leading the early action while normally defensive utilities are down the most so far. 

The Nasdaq is up a little more than the S&P 500, led by AAPL which has been acting better since reporting earnings.  Growth stocks are starting to lead the market again.  Google is breaking out to new highs, and 3D printing stocks like DDD are recovering nicely.

The dollar is higher today and commodities are mixed.  Oil prices are a bit lower near $95.35.  Gold prices are up a tad around $1467.  But silver prices are lower as are copper.

The 10-year yield is roughly flat at 1.75%. And the volatility index is 2% higher but still at a very low absolute level of 13.12.

Trading comment: With all of the major indices at new highs it's hard to fight this market.  We still expect to see some rotation from the defensive dividend type stocks that led most of the year so far into more traditional growth stocks that have lagged.  Our strategy hasn't changed there.  In terms of asset allocation we have been looking for spots to add to overall equity exposure but the good buying opportunities have been few and far between.  Not sure how long it can last in that fashion, but in the near-term it sure feels like more of the same.

KAM Advisors has long positions in AAPL, DDD, GOOG


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