Monday Morning Musings

Markets are mixed this morning but mostly just subdued on lower volume.  The stock market has had a fabulous year in 2013, better than almost anyone predicted, and it is likely most participants are sitting on their hands for the next couple of days until the calendar turns to 2014.  As such, volume levels are likely to continue to run at levels similar to last week's holiday shortened week.

In economic news, pending home sales for November rose 0.2%, which was below expectations but above the previous month's decrease of -1.2%.

In corporate news, AAPL is lower by 1% after the Board urged shareholders to reject the buyback proposal recommended by Carl Icahn.

Asian markets were mixed overnight.  S. Korea's industrial production fell -1.3%.  Europe's markets are mostly flat.  ECB President Draghi said no urgent need for additional interest rate cuts as he does not see signs of deflation.

Commodities are lower with oil prices back below $100 and gold prices down near $1205.

Bond yields are lower with the 10-year Note below 3.0% to 2.97% currently. 

The volatility index got down to the 12 level last week, which has been a level that the VIX has bounced from all year.  Today it is up nearly 5% to 13.07 so far.

Trading comment: Markets do appear due for a pause when the calendar changes to 2014.  There is likely some deferred profit taking that will take place.  At the same time, there is often a lot of buying pressure as new funds get committed to the market at the beginning of the year.  Also, we have seen reports that mutual fund managers are holding higher cash balances than they have in many months.  So there are definitely arguments to be made on both sides of the table.  We are not making any big bets on the outcome, but we are holding a little higher levels of cash that we would look to put to work on any pullback.  Patience.