The market is rallying nicely in early trading, reversing much of yesterday's selloff. It remains to be seen if this action holds, and if yesterday's decline will just be a one day pause. But so far the action looks good, and many companies are reporting solid earnings.
In tech, YHOO reported solid earnings and its stock is higher. In financials, Wells Fargo (WFC) and USB reported good earnings and those stocks are higher also. Morgan Stanley (MS) was unable to match the solid results from Goldman yesterday, and its stock is lower. And industrials are mixed with United Tech (UTX) and Boeing (BA) reporting good results, much their stock action is mixed.
Among the ETFs, materials stocks are leading the action, while financials are lagging. Financials were in negative territory earlier, but positive comments from Wells Fargo during their conference call seems to have improved sentiment for the group. Wells said that loan demand is improving.
Asian markets were lower overnight, following the selloff in the US yesterday; the dollar is also lower today, which is helping boost commodities. Oil prices are higher to $80.57, and gold prices are basically flat near $1335.
The 10-year yield is holding at 2.48%, and the VIX is down slightly to 20.18.
Trading comment: The S&P 500 held yesterday near 1160, which is right around its 20-day moving average. For now, that will be the line in the sand. If we can hold above those levels, then I think the market should continue to work higher after a brief pause. If we break below those levels, then I would look to the 1150 level as the next area of support.
I am also watching the market leading stocks that have sold off following earnings reports. I want to watch for them to consolidate and find support. If they can get back above their 50-day averages, then I would add to them. But if they can't get back above those levels, it might be time to sell remaining positions.
long WFC
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