Monday Morning Musings

Markets are lower in early trading today.  There hasn't been much in the way of corporate news or economic data here in the US, which leaves the markets to take their cues from overseas markets.

Over the weekend, China reported a trade deficit of $22.98 billion when a trade surplus of $14.50 billion was expected.  The discrepancy was due to a surprising decline in exports, which fell -18.1% vs. an expected gain of 6.8%.  China is saying there were some adjustment issues surrounding the Lunar New Year, but markets are being cautious.

Material stocks are down the most, as they are most sensitive to an economic slowdown in China.  Defensive utilities are down the least so far today.  Shares of Facebook (FB) are bucking the weakness on a new analyst upgrade that carried a price target of $90.

European markets are mixed.  Eurozone investor  confidence improved to 13.9 from 13.3.  And Spanish and Italian industrial production both rose.

Commodities are mixed so far.  Oil prices are weaker and falling back to $101.  Gold prices are firmer and rising to $1343.

The 10-year yield is slightly lower to 2.78% after a big spike higher last Friday on the stronger than expected payrolls report.  The 10-year on Friday rose above 2.80% for the first time since late January.

The volatility index is also higher today and rising back above the 15 level.  It recently tested the 13.5 level three times but never broke below those levels and is now bouncing.

Trading comment: Just a little ebb and flow in the market.  This looks like a healthy digestion of recent gains and we would still be looking to add to market leaders on pullbacks.  The one area we are growing a little cautious is biotechs, since they have had such big runs and could be susceptible to larger pullbacks is sector rotation causes funds to flow out of that sector in search of areas that aren't up as much in price in recent weeks and months.