Monday Morning Musings: Healthy Digestion Ahead?

The markets are mixed so far this morning, with the Nasdaq leading the broader market by a tad. Corporate newsflow has been relatively light, and there are no major economic reports to speak of.

Greek worries continue to ease after Frech Pres. Sarkozy said that the EU would support Greece if required to do so, but Greece responded by saying that it will not need foreign help.

The dollar is slightly weak today, but commodities are mixed. Oil is trading higher, above $82, while gold is lower near $1125.

Looking at the sector ETFs, tech is strongest (+0.4%), while energy is weakest (-0.5%). Real estate is also strong (+0.72%), while emerging market etfs are lagging.

Asian markets were higher across the board overnight; the 10-year yield is higher to 3.70%; and the VIX is up +2.1% from Friday's very low levels.

Trading comment: The market has done a very good job hanging in there after reaching its recent overbought condition. The graph below shows that the oscillator has consolidated in a sideways fashion, rather than plunging back down to lower levels.

This is a healthy way for the market to work off its overbought situation, and could mean that after 5 straight up days in the S&P 500 last week, that any pullback could be shallow. Another supporting factor is the fact that upside volume on the NYSE on Friday topped 90%, a rare occurrence.