Thursday, February 27, 2014

Still Looking For New Highs

While the bears continue to point to a number of factors that will cause an imminent decline in the markets, the price action of the major indexes paints a different picture.  Most indexes continue to hover in new high territory.  The one lagging index as been the Dow, but it too looks poised to climb higher in the near term.

In economic news, the January durable goods report was pretty solid.  The overall figure fell -1.0% as expected, but this included a -7.2% drop in transportation orders.  The ex-transportation figure for durable goods rose a better than expected +1.1%.  Not bad.

The other news today is the testimony of new Fed Chair Janet Yellen before the Senate Banking Committee. 

Asian markets ended mixed again.  The People's Bank of China said the country's economy is likely to be more volatile in 2014.

Europe's markets are lower today.  Germany's unemployment rate held steady at 6.8%.  Swiss GDP climbed 0.2% last quarter and Spain's GDP also rose 0.2% last quarter.

Oil prices are slightly weak near $102.32 while gold prices are firm around $1333.

The 10-year yield continues to slide, down to 2.65%.  And the volatility index is steady at low levels of 14.10.

Trading comment:  There are certainly some areas of froth in this market, but there are also plenty of stocks and sectors that are doing well.  Yesterday the home construction ETF (ITB) broke out to 7-year highs.  We have owned this one for awhile and view the price action as pretty bullish.  We are also paying attention to the retail etf (XRT) which broke back above its 50-day average in convincing fashion.  As for large-cap growth stocks, the one big laggard continues to be AAPL.

KAM Advisors has long positions in AAPL, ITB, XRT


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