Monday Morning Musings

The market is mixed in early trading.  It was a bit lower after the open, but the market really hasn't gone down much at all lately.  Buyers seem to be quick to buy every dip.  So when the market was lower this morning selling dried up quickly and several of the major indexes are back in positive territory.

In economic news, the July ISM Services index rose to 56.0 from 52.2 last month.

There were also good Services PMI readings from overseas markets as well.  China's HSBC Services PMI remained unchanged at 51.3.  That was viewed as positive as many feared it might show more of a slowdown.

Eurozone services PMI rose to 49.8 from 49.6.  Great Britain's services PMI jumped to 60.2, its highest reading since 1998.  Pretty surprising.  Maybe QE is starting to work there.  Separately Greece's finance minister said the country's funding obligations are fully covered until August 2014.

The dollar index is little changed so far.  Oil prices are slightly lower near $.  Gold prices have dropped below the $1300 level to $1298.  Silver and copper prices are lower as well.

The 10-year yield is higher to 2.65% after the big reversal lower on Friday following the weaker than expected jobs report.

The volatility index is barely above the 12 level.  That's a pretty low level, and one that has marked the lower bound of the VIX trading range recently.  I think that the 12 level likely holds and we see a bounce in the short-term in the VIX.  Of course, this would mostly likely be accompanied by more of a pullback in equities than we have seen of late.

Trading comment: Investor sentiment is growing more bullish, but is not yet at extreme levels.  The indicators we monitor have been on the rise since bottoming in June, but bullish levels are still not flashing the same levels of complacency we saw back in May.  That means that I think we could continue to see this sort of stair-step higher action in the market until folks become overly complacent again, which could leave the market more vulnerable to a bigger correction.