10 Şubat 2011 Perşembe

Back In The Saddle

The market pattern looks similar to the last several days, where there is some brief selling in early trading, but then the market firms up into the close. This has kept the long-awaited correction at bay, and helped propel the Dow to an 8-day win streak.

Asian markets were mostly lower overnight (except China), and Europe is lower this morning. It was just announced that Egypt's president could step down and let the VP lead. This should offer some relief in the financial markets over there, although oil prices are still trading higher on the day.

The dollar has been higher on these middle east concerns, and that is pressuring most commodities today. Gold prices are lower to $1352.

In earnings news, Cisco (CSCO) and Akamai (AKAM) both offered tepid guidance, and their stocks are getting hit this morning. On the upside are Whole Foods (WFMI), which raised guidance, and Prudential (PRU). Both of those stocks are higher, with WFMI up by a lot.

In economic news, weekly jobless claims fell below 400,000 for only the second time since July 2008, which could be a good sign. As Bernanke said yesterday, unemployment has remained stubbornly high.

The 10-year yield is higher again to 3.68%; and the VIX is +3.5% higher to 16.45, but still trading below its 50-day average.

Trading comment: Sector rotation continues. Today, tech is out of favor (CSCO, AKAM), but food and restaurant stocks are strong, and materials stocks are bouncing as well. And the real estate etf (IYR) is at a new multi-year high. The market remains fairly overbought, but that has been a persistent condition for the last couple weeks, and hasn't been a good sell indicator. I think most participants remain in dip-buying mode for now.

Also, the cloud stocks (FFIV, CRM, VMW, etc) continue to work on putting in new corrective bases. This is constructive, and I wouldn't be surprised to see these stocks back on the leaders list at some point. Networking stocks (APKT, ARUN, RVBD, etc) remains strong right now, but the leader list is fairly broad, with good representations from a wide variety of industries.

long CRM, FFIV, IYR

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