Wednesday, February 19, 2014

US Stocks Buck Overseas Weakness

Overnight markets were pretty weak, as a rising Yen again sparked concerns about the unwinding of the global carry trade.  Japan's market was lower, but China bounced as SHIBOR rates fell to their lowest levels since last May.

Europe's markets were also weak this morning as the Yen climbed.  Great Britain's unemployment rate ticked up to 7.2% from 7.1%.

While pre-market futures in the US pointed to a lower open for stocks, by the time the bell rang our markets opened higher and remain in positive territory (the Nasdaq is slightly lower).

In corporate news, Zales (ZLC) is 40% higher after announcing it will be acquired by Signet Jewelers (SIG) for $21 per share.

In economic news, housing starts fell -16% in January, but again this big drop is likely clouded by the impact of severe weather.  We might not get a good handle on normalized rates until March figures come out.

Bond yields continue to ease back with the 10-year yield down slightly to 2.69%.

The volatility index hit 15 at the open but has pulled back to 14.50 (+4.5%).  A move back above 15 could be a sign that more volatility is in the cards.

Trading comment: The price action in the market continues to impress.  The S&P 500 is only 4 points away from moving back into positive territory for the year.  If we make new highs, it could also lead to some short covering as those folks who were betting on a bigger decline cover their bets and await a better opportunity.  We continue to look for leadership in the market, with many of the stocks on our list hailing from the healthcare sector.  There are also some tech and industrial stocks breaking to new highs, but it is amazing to see how many healthcare and biotech stocks continue to rally.


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