Monday Morning Musings

The market looked a little weak before the open but it is now nicely higher.  Go figure.  This has been a slow motion melt-up rally, with the S&P 500 higher for 12 of the last 13 days.  And the one down day saw the index lose a whopping 2 points!  I hope anyone short this market doesn't work on a high floor.

There was a lot of M&A action over the weekend.  Tyson Foods is buying Hillshire Brands for a 6% premium, Analog Devices is buying Hittite Micro for a 29% premium, and Merck is buying Idenix Pharma for more than triple its Friday closing price.  Nice gain.

Asian markets were higher overnight.  China's export figures were better than expected (+7.0%) but import figures were worse (-1.6%).  Japan's GDP jumped 6.7% in Q1, prompting the BoJ governor to state that the stimulus plan launched last year achieved its goal of boosting the economy and ending deflation. 

Europe's markets were up slightly.  Eurozone investor confidence fell to 8.5 from 12.8.

Oil prices are higher to $104.15 and drivers are likely not going to be happy at the pump as the summer driving season kicks into gear.  Gold prices are flat near $1253.

The volatility index hit another multi-year low last Friday breaking below 11.  Folks are now wondering how long it could go?  I think we will see the VIX spike from here at some point, and I even think it offers a good trade for folks who trade options.

Trading comment: Despite the market remaining overbought, it refuses to pull back.  Frustrating if you have lots of cash to put to work.  But there are still stocks breaking out of recent consolidations that look good.  We just don't want to chase anything that has become extended in price.