Monday, July 01, 2013

Monday Morning Musings

Markets are nicely higher on the first day of the new quarter, with the Dow up +150 points in early trading.  Of course, its still very early in the day so anything can happen by the close. 

There doesn't seem to be much news moving the market today, as it appears more like new money being put to work as the new quarter begins.  ONXX is up 50% after rejecting a takeover offer from AMGN.  And AAPL is up 2.8% afer reports that it registered the iWatch trademark in Japan.  It also got an upgrade and a $600 price target from Raymond James.

Asian markets were mixed overnight.  Japan was 1.3% higher after the economy minister said that the country's real economy is "clearly recovering".  In China, the HSBC manuf. PMI ticked down to 48.2 from 48.3, a level that points to continued contraction in the manuf. sector.

European markets are higher today.  Eurozone manuf. PMI rose to 48.8.  Most countries PMI indexes rose except for Germany which ticked down to 48.6.

After an 8-day win streak, the dollar index is slightly lower today.  That is helping most commodities.  Oil prices are higher to $98.  Gold prices are up near $1241.  And copper prices are bouncing sharply.

The 10-year yield hovered near the 2.50% level most of the first hour of trading.  It is currently at 2.49%.

The volatility index is 4.2% lower to 16.15.  The VIX has moved sharply lower since last week's spike near the 22 level.

Trading comment: We have been watching the overhead 50-day averages to see if they act as resistance on any bounces.  Right now the S&P 500 is up exactly at its 50-day at the 1624 level.  So this is a key test.  Sometimes it makes sense to look at some of the other indexes to see how they are trading in relation to their respective 50-day averages.  The Nasdaq, S&P mid-cap, and Russell 2000 are all above their 50-days.  So that lends itself to the notion that the S&P 500 will be able to lift itself above its 50-day as well.  Lots of traders are looking for more of a correction in July.  But investor sentiment is already showing some bearish readings, so from a contrarian perspective the market could look to frustrate the bears once again.  We should know fairly soon.

KAM Advisors has long positions in AAPL


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