Monday, December 02, 2013

Monday Morning Musings

Markets are off to a lackluster start after the Thanksgiving holiday weekend.  Reports about retail sales are mixed, but boy it sure was a great weekend for college football.  Retail stocks are mostly lower after the National Retail Federation said that retail sales are below last year's levels.  But comScore has said that online holiday sales to date are up 3.0% vs. last year.

In economic news, the November ISM manuf. index rose to 57.3 from 56.4.  There was also a report showing October construction spending rose 0.8%.

Asian markets were mixed overnight.  Tensions continue to heat up between Japan and China regarding the no fly zone.  Reports suggest the US will join Japan in asking China to stand down.  China's HSBC manuf PMI rose to 50.8 from 50.4.  India's PMI also improved while Australia's fell below the 50 level to 47.7.

Europe's markets are mostly lower.  The Eurozone manuf PMI held at 51.6 from 51.5.  Great Britain's rose the most to 58.4, while Spain's fell to 48.6 from 50.9%.

Bond yields are on the rise today, with the 10-year yield up to 2.80%.  If the 10-yr closed here it would be the highest closing yield since September.

Volatility is also on the rise with the VIX index up 2.5% to 14.05.  The VIX had been hovering in the 12 range but has started to breakout and should get back to 15.

Oil prices are higher near $93.60 but most other commodities are lower.  Gold prices are weak again falling to $1228.  Silver and copper prices are also lower today.

Trading comment: The market still looks like it is in need of a pullback, but hoping for said event has been an elusive endeavor.  We continue to look for stocks that are just breaking out and could lead into year-end.  Last week we highlighted AAPL which has had a nice move already and still looks good.  Today we are adding STX which appears ready to break to new highs imminently.  Financials continue to show solid action while REITs and utilities continue to lag.

KAM Advisors has long positions in AAPL and STX


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