Monday, September 09, 2013

Monday Morning Musings

Markets are higher in early trading following strength in Asian overnight.  There isn't much else in the way of market moving data this morning.  There are no economic reports to speak of.  There was one M&A deal, with Moles (MOLX) agreeing to be acquired by Koch Industries for a 31% premium to Friday's closing price.

Asian markets were higher overnight led by a 2.5% pop in Japan after Tokyo won the bid for the 2020 Olympics.  Japan's Q2 GDP was also revised higher to 0.9% from 0.6%.  And positive data out of China came in the form of a better than expected trade surplus of $28 billion.

Europe's markets are mostly lower as political turmoil continues in Italy with Berlusconi.  The Eurozone Sentix investor confidence index rose to 6.5 from -4.9 previously.

Bond yields are easing back further with the 10-year yield lower to 2.90%.  This is giving some breathing room to interest rate-sensitive sectors.

The dollar is lower this morning but commodities are mixed.  Oil prices are lower to $109.60 as the debate over Syria drags on.  Gold prices are up a little near $1389.  Copper prices are higher but silver prices are lower.

Despite the gains in stocks this morning the volatility index is actually higher to 15.93.  I would expect to see it lower on a day like today.  Sometimes when the VIX trades like this it means traders are anticipating weakness to surface later in the day.

Trading comment: We have been trying to remain patient while the S&P 500 continued to trade below its 50-day moving average.  This type of defensiveness often keeps one safe from unforeseen market volatility and prolonged market downtrends.  The SPX is still a few points below its key moving average, so too early to sound the all-clear.  But it is certainly trying to regain those levels.  The S&P 400 midcap index is also still below its 50-day average.  So while there are individual situations where we would be willing to commit cash, we haven't started putting money back to work on a wide scale just yet.


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