Wednesday, October 30, 2013

Stocks Overdue For A Rest

The market was briefly higher in early trading but has since moves slightly into negative territory.  After a long rally like we have seen it is well within reason to expect some pullback and consolidation in the major indexes.

In economic news, the ADP Employment report showed the private sector added 130,000 jobs in October, a bit above expectations. 

Later today we will get the latest FOMC statement.  While there was a lot of chatter about a potential 'taper' at the September meeting, there is far less speculation today and most expect that the statement will contain little changes from last month.

The 10-year yield is down slightly ahead of the FOMC meeting, falling back below the 2.50% level to 2.48% currently.

Stocks rising on earnings: BIDU, BWLD, GM, GILD, TASR, DBD, AMT

Stocks falling on earnings: LNKD, YELP, TTWO, CRUS, CMCSA, SODA, BWA, HES, ADP

Asian markets were higher across the board overnight.  China rallied despite another spike in the overnight SHIBOR rate market.  The PBOC did inject more liquidity into the market yesterday, which helped medium-term rates but not overnight rates.

Europe's markets are also higher.  Spain registered its first quarterly growth in GDP in 9 quarters as GDP expanded 0.1%.  Not much, but it's a start.  Germany's unemployment rate held steady at 6.9%.  And Italy raised its 2014 growth expectations to 1.1% from 1.0%. 

Commodities are mixed.  Metals are higher with gold up to $1353 and silver and copper higher also.  Oil prices are weaker near $97.33.

Trading comment: The market seems overdue for a pullback and some consolidation.  We are watching those stocks that recently reported strong earnings and had positive reactions and looking for opportunities where those stocks pullback with the broader market and offer opportunities for investors to add to them.  Interest rates pressures seem to be off the front burner for now, today's FOMC meeting notwithstanding.  That means stocks will likely continue to be the favored asset class for the near-term.

KAM Advisors has long positions in SODA


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