Monday Morning Musings
Markets are slightly higher in early trading. Last week the stock market saw a 3-day pullback in the first part of the week, but the subsequent bounce took the S&P 500 right back to new highs. Pretty surprising, but shows that dip buyers remain eager to put money to work in stocks.
Over the weekend a nuclear deal was reached with Iran. Oil prices are only down slightly as a result, near $93.86 this morning. But it helped improve sentiment and most Asian markets rallied overnight. China lagged as tensions heat up with Japan over the Senkaku Islands.
European markets are also higher today. Germany's finance ministers said that contagion risks are no longer present in the Eurozone.
In economic news, pending home sales for October ticked lower to -0.6%, following last month's revised decrease of 4.6%.
Gold prices are also lower this morning, near $1240 but silver prices are higher.
The volatility index remains at very low levels near 12.67, which has probably helped the equity markets rally as we remain in this subdued period of volatility.
Trading will be light this week as the market is closed for Thanksgiving on Thursday and open for just a half day of trading on Friday.
Trading comment: For most of the year we have been talking about the stair-step market, and lately it has simply been more of the same. Last week's dip was bought quickly and the market is back at new highs. There also continues to be healthy group rotation, such that while areas like oil & gas are correcting right now money is flowing back into financials where we are seeing fresh breakouts in the banks and brokers. Biotechs are also back in rally mode after a few weeks of pullbacks and consolidation.