Is The Correction Over?
Markets are slightly higher again in early trading. Yesterday the markets enjoyed outsized gains in a surprisingly strong rally. Janet Yellen was testifying and it could be that the market interpreted her testimony as more dovish, although she did say that the taper will continue apace.
This morning there are no big economic reports to move the market. A few earnings reports continue to trickle in, and this morning many of the stocks reporting are moving higher (DVA, DE, FOSL, TRIP).
Commodity prices continue to move higher also. Oil prices are very high again, although we haven't heard much about it. Crude prices topped $101 this morning. I suppose if prices at the pump continue higher than more people will start to complain. Right now most of the folks in the east are too busy worrying about freezing weather. Gold prices are also higher again today, moving up to $1293.
The 10-year yield is higher today to 2.76%. And the volatility index is just slightly lower to 14.45, closing below the 15 level yesterday.
Asian markets were higher overnight. China's trade surplus expanded on 10.6% export growth.
Europe's markets are also higher. The Bank of England said it sees the potential to keep its key interest rate at 0.5% even after the 7.0% unemployment threshold is hit.
Trading comment: Yesterday's rally was quite strong. It helped push the S&P 500 and the mid-cap index right through their overhead 50-day averages on the first attempt. We had said there was a good chance the 50-day would act as resistance, but that didn't happen. You have to respect the price action, and right now it is telling investors that the lows for this correction are likely in. The S&P 500 pulled back 6% from its recent highs to lows, and that is about an average pullback. Some were hoping to get the 10% correction that we haven't seen in a long time, but that doesn't look to be in the cards right now. We have been holding higher cash balances, but are looking to get more invested by using upcoming dips to buy.