Monday Morning Musings

Markets are slightly higher this morning.  Stocks continue to consolidate near their recent highs after mostly sideways action last week. 

In economic news, September factory orders rose 1.7%.  Earnings reports continue to trickle in but most of the big earnings reports are behind us now.  The big stock event this week will be the IPO of Twitter.  Twitter raised the offering price today, and expects to start trading on Thursday.

Markets across Asian ended mostly lower, but Japan, India and Singapore were closed for holidays.  China's services PMI improved to a 14-month high of 56.3.  China's overnight SHIBOR rates continued to ease, with the one-month rate falling 56 basis points to 4.61%.

Europe's markets are slightly higher today.  Eurozone manuf PMI held steady at 51.3.  ECB member Asmussen said interest rates in Germany are too low, but didn't comment on this week's upcoming ECB rate decision.

Commodities are mostly higher, with gold prices up to $1318 and oil prices higher near $94.80.

The 10-year yield is lower today to 2.59%.  St. Louis Fed President Bullard was on CNBC this morning, and said that we have seen substantial progress in the labor market.  He also said that inflation remains low and that that allows the Fed to be patient with respect to tapering its asset purchases.

The volatility index is flat today and remains at very low absolute levels near 13.25.

Trading comment: The market could have sold off more last week, but traded in a mostly sideways fashion with 2 down days last week.  It could be that the market is running out of steam and will subsequently see more of a pullback, or it could be that this is just another sideways pause for the market and from there we will see another upside breakout to new highs.  This week should give us at least a glimpse which outcome we might see.  We would certainly prefer more of a pullback to add to stocks at better prices, but we also want to remain flexible and not be left behind if stocks start to breakout from sideways consolidation patterns again.  But for now we are being patient.