Volatility Picking Up From Day to Day

If you aren't sure what is meant when you hear the talking heads speak of increasing volatility, just look at the intraday swings from yesterday.  The market opened higher in the morning, then reversed fairly hard into negative territory before firming and closing the day with solid gains.  Those intraday swings have been absent from the market for most of the year.

The volatility index is slightly higher today near 16.50.  We have been using the 15 level as our indicator for when volatility is picking up (above 15) and when it is quieting down (below 15).  So for the short-term we are continuing to look for increasing daily swings and staying a bit more defensive as a result.

There wasn't much in the way of market moving economic or corporate news this morning.

Asian markets were mixed overnight.  Japan bounced back +2.1% but China was lower by -1.2%.  The Reserve Bank of Australia held its key interest rate unchanged at 2.75% but left the door open to more rate cuts due to the tame inflation outlook.

European markets are showing modest gains.  The EC will propose a single bank oversight mechanism which will be funded through bank contributions.

The dollar is higher this morning, and weighing on commodities.  Oil prices are weaker near $92.50 and gold prices are back below the $1400 level ($1393).

The 10-year yield is slightly higher at 2.14%. The 10-yr has been consolidating around this 2.15% level for the last week.  If it breaks above these levels, next resistance doesn't really come into play until 2.40%.  We are not saying this is in the cards, but the bond market could experience more volatility on any breakout.

Trading comment: The S&P 500 has been making a short series of lower highs and lower lows since the May 22nd peak reversal.  We still expect another push higher into quarter end so we are buyers on dips.  As for our old friend AAPL, it has been acting okay, but a convincing move above $460 looks needed to embolden the bulls again.  Hopefully the company is in there putting their buyback to work.

KAM Advisors has long positions in AAPL