Back To New Highs
The market is rallying nicely in early trading, and that has pushed most of the major indexes to new highs. For now it looks like the big selloff on Monday could turn out to be another one day wonder. We haven't seen any follow through yet and today the indexes have more than reversed those losses.
Tech stocks are higher with AAPL having a nice morning after inking its deal with China Mobile to sell the iPhones on their network. Financials are also having a good day, led by Bank of America (BAC) which reported better than expected earnings.
In economic news, the Empire Manuf survey for January jumped to 12.5 from 1.0 last month. This was well above expectations.
Bond yields are higher. After testing its 50-day average on Monday, the 10-year yield is higher for a second day back to 2.90%.
Commodities are mixed with oil prices higher to $94.15 but gold prices a bit weak around$1239.
The volatility index is back down near the 12.0 level where we have seen it find support and bounce from several times.
Asian markets were mostly higher overnight. Japan bounced back +2.5%. Singapore's retail sales fell -8.7%. And the Peoples Bank of China said it would maintain prudent monetary policy without much changes for 2014.
Europe's markets are also higher today. Swiss retail sales rose 4.2%. And the World Bank increased its 2014 GDP growth forecast to 3.2% from 3.0% previously.
Trading comment: Markets making new highs is a bullish sign. Many folks who are worried about the "January effect" are watching the SPX 1848 level. If the S&P 500 closes in positive territory for January - above 1848 - it is supposed to have much higher bullish implications for the remainder of the year than if the market closes lower in the first month of trading. This comes from the Stock Trader's Almanac which has calculated the results. It does seem like there was some latent profit taking that folks pushed into 2014 rather than late last year so that they could defer the capital gains for another year.
KAM Advisors has long positions in AAPL and BAC