Tuesday, June 03, 2014

Waiting On The ECB

Stocks are slightly lower in early trading, but really have not gone much at all following their recent rally.  The S&P 500 has closed higher in 7 of the last 8 trading sessions.  That leaves the market in a short-term overbought condition.  Nonetheless, selloffs continue to be brief affairs.

Large-cap stocks continue to garner most of the buying activity, as the mid-cap and small-cap indexes remain below their recent highs and even below their 50-day average in the case of the latter.

There really isn't much in the way of market moving corporate or economic data today in the U.S.  It feels like most investors are waiting to see what the ECB announces on Thursday.  Speculation is running high that they ECB will announce some non-traditional monetary stimulus, maybe QE or something like it.  It could be that the markets have been running in anticipation of this.

Asian markets were mixed overnight.  China's HSBC manuf. PMI fell to 49.4 from 49.1.  Hong Kong retail sales fell -9.8%.  And a BoJ governor said he expects inflation to reach its 2.0% target in Japan in 2015.

Europe's markets are lower today.  Eurozone CPI rose 0.7% on a yearly basis.  And Spain is nearing approval of a pro-growth economic plan.

The 10-year yield is rising a bit further to 2.56% today.  And the VIX is up 3% but still at low levels near 11.95.

Oil and gold prices are relatively flat near $102.46 and $1244, respectively.

Trading comment: The market has had a big run the last couple of weeks, at least judging by the S&P 500.  We don't like to chase strength too much.  But as we always look for leadership, it appears that large-caps are taking the helm from smaller-cap stocks.  So this is where we want to focus more attention as we look to buy any dips that hopefully will materialize.

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