28 Eylül 2010 Salı

Consumer Confidence Sinks Despite Recent Stock Rally

The market was flattish near the open, after a benign housing report, but then took a quick dip lower after the Consumer Confidence report came out. I guess the recent rally in the stock market didn't sway participants in this survey, as consumer confidence for September came in at 48.5 vs. expectations for 53.0. It was also the lowest reading since February.

That led to some selling in stocks, but as of this post, the market seems to be coming back. Surprising how this market sure doesn't stay down for long lately. AAPL was down $15 at the open on rumors the COO might leave to HPQ (no way this is true), but it has already climbed all the way back to down less than $2.

Walgreens (WAG) stock is up sharply after the company reported better-than-expected earnings.

Among the sector ETFs, consumer staples (XLP) have been bucking the weakness so far (+0.29%), while materials (XLB) are the biggest laggard (-0.66%).

Asian markets were lower overnight. The dollar is also lower, despite renewed worries over sovereign debt in Europe (namely Spain and Ireland). Gold hit new highs near $1306 earlier, but has since reversed those early gains. Oil is also lower near $75.82.

The 10-year yield is back down to 2.47%. This is the level that market the lows at the end of August, so a close below this level would be new lows for the year.

The volatility index (VIX) is up +3.55% to 23.35 currently, knocking on the door of its overhead 50-day moving average.

Trading comment: I talked about that S&P 1131 level as initial support. Today it was tested again, as the SPX briefly dipped to 1132 on this morning's selloff. You have to be on your toes to take advantage of these pullbacks, as we are quickly back at 1140. It is possible that portfolio managers looking to put cash to work ahead of quarter end are moving quickly to buy the dips. If so, does that mean we could see a bigger pullback after quarter-end?

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