Consolidating Near Recent Highs

Markets are pulling back this morning, but again not in a big way.  Recent selloffs have mostly been mild and a look at the major indexes shows that they continue to consolidate near recent highs.

There are no major economic reports today, and earnings season is winding down. 

Action overseas was nothing to write home about either.  Asian markets were mixed, but Japan rallied strongly as the Yen dipped to a 2-month low.  The Bank of Indonesia surprised markets by hiking its key rate 25 bps to 7.50% to combat inflation.  The Chinese press said that China could lower its 2014 GDP growth target from 7.5% to 7.0%.

Europe's markets are mostly lower today.  The European Union has agreed to a budget for next year that calls for spending cuts of 6%.  Another headwind to economic growth.

Commodities are lower today.  Oil is slightly weaker near $94.90.  Gold prices are lower to $1280.

The 10-year yield is up slightly to 2.77%.  And the VIX is a bit higher today but still at low absolute levels around 12.75.

Trading comment: Not a lot of market moving news today.  The market continues to pullback in mild fashion and not give much back in percentage terms.  The normal pattern here is that after a period of this sideways consolidation we would see another breakout to new highs.  I would say our biggest worry here is that investors are growing more complacent.  It seems consensus now that stocks will stay strong into year-end and enjoy another solid year in 2014.  If we know anything, it's that the consensus is rarely correct in its forecast.  So we could see something that shakes investor confidence. The question is more of when not if something like that happens.