Monday, October 21, 2013

Monday Morning Musings

Markets in the U.S. are mixed after a nice run last week.  The S&P 500 has actually been higher in 6 of the last 7 trading sessions.

In economic news, existing home sales hit a rate of 5.29 million units.  This was down from last month's revised figures of 5.39 million units.

Earnings season continues to be busy this week.  One of the big reports we will be watching is AAPL, which reportedly is seeing good sales of its new 5s phones but disappointing 5c sales.

Stocks rising on earnings: SAP, BCC, VFC, PHG, HAS, CE

Stocks falling on earnings: NVR, HAL, MCD, MAN, GCI

Asian markets were mostly higher overnight, led by a 1.6% gain in China.  China's Premier reiterated that its growth targets will be met.  Japan also rallied after the Bank of Japan said the central bank would continue its monetary easing until its inflation target of 2.0% was met.  The BofJ raised its economic assessment in all 9 regions.

Europe's markets are mixed today.  Italy's appeals court banned PDL leader Silvio Berlusconi from public office for 2 years.  Great Britain's house price index rose 2.8% last month.

Commodities are mixed today.  Gold prices are a bit higher to $1317.  Silver and copper prices are also higher.  But oil prices are weaker and testing the $100 level for the first time in awhile.

The 10-year yield is a tad higher to 2.61%, a level it has been testing for almost a month now.

The volatility index (VIX) came down hard last week and sliced through the 15 level we often talk about.  Today it is 4% higher, but still only at the 13.6 level.  Over the last year when the VIX is below the 15 level it has provided a good backdrop for the market to rise.

Trading comment: Markets continue to respond positively to most of the news coming out.  There have been a few disappointing earnings reports.  Those are stocks that we don't want to add to, despite their pullbacks.  We want to stick with the leaders which only seem to extend their leads when the market is in rally mode.  GOOG was huge last week.  Let's see if AAPL can garner a positive reaction from investors as well.


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