Monday, May 12, 2014

Monday Morning Musings

Markets are off to a strong start.  The Dow Jones has made a new high for the year and the SPX isn't far off.  The SPX would need to clear 1897 for a new high (today it hit 1893).

There hasn't been much in the way of market moving news overnight, so this is mostly buyers stepping in after a multi-week correction.  There was an M&A deal this morning with Hillshire Branks (HSH) agreeing to by Pinnacle Foods (PF) for an 18% premium to Friday's close.

Overnight, Asian markets ended mixed.  China bounced 2.1% on reports suggesting that they may relax restrictions on foreign investment into Chinese companies.

European markets are higher today as the news out of Ukraine has not escalated to the point of worrying global investors. 

Oil prices are still hovering above $100 and gold prices are higher today and struggling to get back above the $1300 level.

The 10-year yield is getting a little bounce to 2.65%.  And the volatility index is back down near mutli-month lows at 12.35.  The last time we saw the VIX at these low levels it bounced around there for a couple weeks and then saw a sizeable spike higher.  Would not be surprised to see a repeat.

Trading comment: This morning in our trading accounts we are playing some short-term bounce candidates like FEYE, ZU, etc.  These stocks have been absolutely crushed in recent weeks and seem ripe for at least a nice bounce.  Bigger picture, we said last week we would not be surprised to see the market make another push higher into early summer.  We are looking for new leadership areas in the market and adding to those areas when looking to put cash to work. 

KAM Advisors has long positions in FEYE, ZU


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