Techs Lag On Last Day Of Quarter

Stocks are mixed in morning trade, with defensive sectors like consumer staples and healthcare holding up, but growth stocks like tech lagging.

Overnight Asian markets were mostly lower, but Europe is higher this morning. Eurozone members recently said that the rescue fund for the region has been expanded to 800 billion euros.

The dollar is a bit lower this morning, which is lending a bid to commodities. Oil prices are up a bit to $103.15 and natural gas prices are bouncing also. Gold prices are higher near $1665 and silver prices are higher as well.

In economic news, the final reading for Univ of Mich. consumer sentiment in March improved to 76.2 from an earlier reading of 74.3. Also, the Chicago PMI slipped to 62.2 in March from 64.0 in February.

The 10-year yield is flat near 2.16%, and the VIX is up 2% to 15.80 after a big reversal lower yesterday.

Trading comment: While today could go either way, the S&P 500 is on pace to finish the quarter with a gain of roughly 11%. I haven't checked, but have heard that that would be the best Q1 since 1998. For those who don't remember, 1998 was a tremendously volatile year. That was the year of the famous LTCM debacle that nearly toppled the market and caused a mini crash in October before the Fed stepped in with a surprise inter-meeting rate cut and the market vaulted higher into year-end. The market was also in the midst of the Internet bubble back then, and I believe the famous "Amazon $1000 price target" call was made in 1998. I'm not saying 2012 will mirror 1998, but don't be surprised to see some volatility before all is said and done. There are a lot of cross currents with Euro sovereign debt, China slowdown, US monetary policy, and of course the election this fall. Just don't forget to protect your profits and enjoy the ride.

Will Global Growth Concerns Derail Rally?

The market is lower again in early trading. Today is day 3 of the current pullback, and since this uptrend began several months ago few pullbacks have lasted longer than 3 days. Thus, either we will see the market regain its footing soon or we will have to acknowledge there has been a change in character.

In economic news, final Q4 GDP was unchanged at +3.0%. But Q1 is already expected to show a slowdown from that rate.

In corporate news, earnings results from Best Buy (BBY) and Mosaic (MOS) resulted in selloffs in those stocks while Red Hat (RHT) raised guidance and its stock is spiking higher.

Asian markets were lower overnight on global growth concerns, and Europe is lower this morning. The European Commission reported a decline in economic sentiment, and there has been strikes in Spain as citizens lash out agains austerity measures.

Commodity prices are mixed, as the dollar is firm today. Oil prices are lower near $104.14, while gold prices are holding steady around $1658.

The 10-year yield continues to ease back, now at 2.16%. And the VIX is up 10% to 17.06 and very near testing its overhead 50-day resistance.

Trading comment: Something to keep on the radar is the economic slowdowns in both China and Europe. Further slowdowns in China could weigh on the entire emerging market picture, while another flare up in Europe could hurt investor sentiment again. The news out of Spain is fairly similar to the events in Greece, and Spain is a much bigger economy. A debt crunch there would not be good for the markets and it is hard to tell if our markets will continue to look past the situation. It makes sense to keep these things on the radar. Even if 2012 turns out to be a good year, there will be corrections along the way. And considering we haven't had a real correction in roughly four months, this spring and summer could keep investors on their toes.

Romney's in a Sweet Spot if . . .

If the Supreme Court overthrows the individual mandate, doesn’t Mitt Romney say “I told you so” and emerge as the big political winner?

All along he’s been arguing that only states have mandate power, and that the federal government under the commerce clause, or any other law, is guilty of massive regulatory overreach with Obamacare.

While fending off criticism from Rick Santorum and others about the Massachusetts mandate, Romney has always said it was a state issue, not a federal one. And if the Supreme Court agrees, it would have to give the former governor a leg up in credibility with Republicans and the general public.

President Obama, meanwhile, would emerge as a big political loser. Obamacare was the central signature domestic economic plan for his administration. What else does he have to show for nearly three and a half years in office? An $800 billion stimulus plan that didn’t work? A tax on rich people? An assault on oil and gas companies?

Besides Obamacare, what can the president really point to as an accomplishment?

The other big winners in the event the mandate is overturned are business and the economy. Talk to almost any CEO and they’ll tell you that the tax-, regulatory-, and insurance-cost threats from Obamacare have stopped them from hiring. Or, if they have made new hires recently, they’ve gone a lot slower than would have been the case without Obamacare. Remember how many companies asked for Obamacare waivers this past year. That shows their distaste for the legislation.

Of course, there’s still the huge tax cliff coming early next year, when virtually the entire tax code is upended. But Obamacare, with all its tentacles, has been a huge growth impediment. The Supreme Court could remove that jobs barrier, not to speak of the potential fiscal bankruptcy suffered from the gigantic costs of new Obamacare entitlements.

Mitt Romney’s job in a post-Obamacare world is to show voters what his alternative would be. In a recent op-ed in USA Today, he begins to set this out: tax benefits for individuals purchasing insurance outside their workplace; more competition and consumer choice for insurance plans; medical-malpractice reform; interstate insurance options; and state-determined insurance protection for those with preexisting illnesses. All this is a good start. Rather than a government-run health-care reform, Romney is pushing a market-run reform, which has long been a Republican idea.

So we’ll see in a couple of months how the Supremes decide the Obamacare case. But Romney, the likely GOP nominee, is well positioned to take advantage of a scenario where the Obamacare federal takeover is rejected.

Slowdown Concerns Weigh On Commodities

The market is lower in morning trade, after late day weakness erased yesterday's early gains and left stocks slightly in the red at the close.

Concerns about demand are weighing on commodity prices. There are reports out of China about slowdowns in demand, especially among materials producers. And a report out of the UK showed that its economy contracted by -0.3% in Q4.

Oil prices are down near $105, and natural gas prices are also weak. Gold prices are pulling back to $1671, with silver and copper prices down as well.

Energy stocks are the weakest group in early trading, while financials are bucking the weakness for the most part.

In economic news, durable goods increased 2.2% in February, which is below expectations but still above the prior month's reading of -3.6%.

The 10-year yield is roughly flat around 2.18%. And the VIX is bouncing another +3% so far to 16.12. It is still a ways off from its overhead 50-day which lies near 17.65.

Trading comment: We often see a big down day as we near quarter end, at least in recent quarters. Today is day 2 of another pullback sequence, following last weeks 3-day pullback that was punctuated by a big rally on Monday. It will be interesting to see if things are being propped up into quarter end and if we will see a bigger pullback once Q2 starts. I wouldn't be surprised by this action, and it could be a good setup as we approach Q2 earnings season to have a pullback ahead of it and then another market rally if earnings come in as strong as expected.

China Continues To Lag

The markets are relatively flat this morning following yesterday's outsized rally. I think yesterday was another day that caught many investors off guard as folks continue to wait for a bigger correction in the market to get in, but the market continues its stair-step higher pattern.

Asian markets took their cue from U.S. markets overnight and rallied strong. Japan gained +2.4%, Hong Kong +1.8%, but China actually closed lower. It isn't getting a ton of play, but China's markets continue to lag not just that of the U.S. but also other emerging markets.

A look at the China etf (FXI) is pretty telling. While our markets are breaking out to new highs, the FXI is struggling to break out of a downtrend that started early this month. It is also trading well below its 50-day average, which itself is starting to flatten out and roll over. Technically, this is bearish action and could make for stiff resistance when and if the FXI does rally back to its key moving average.

In economic news, the Consumer Confidence Index declined to 70.2 in March from 71.6 the prior month. Outside of that there hasn't been too much in the way of market moving news. We also haven't seen very many earnings warnings as we head into quarter end. Let's hope that's a good sign for another strong earnings season.

Commodity prices are flattish. Oil is up slightly near $107.25. Gold prices are also up a touch to $1686, as are silver prices.

The 10-year yield is easing back again to 2.21%. And the VIX is up almost 5% near the 15.0 level, still a low level on an absolute basis. We sold are VXX hedge at a loss.

Trading comment: The market continues its recent pattern of climbing the wall of worry in a stair-step fashion without more than a brief 3-day pullback to refresh. I have been saying not to wait for the "big" correction, and to take your cues from individual stock performance. I continue to think this is the best course of action, knowing that a larger correction could come at any time. But if you have been sitting on the sidelines waiting for it, you have missed some great action in stocks and plenty of gains. We recently added back to some of our energy names, i.e- KMP, PER, and recently CLR.

KAM Advisors has long positions in CLR, KMP, PER

Monday Morning Musings

The market is getting a nice pop in morning trade as investors return from the weekend in a buying mood. Last week I surmised that we might see the same pattern develop of a brief 3-day pullback in the market. So far, that looks exactly like what happened.

Last week the market pulled back for 3 days before bouncing on Friday. Today it is extending that bounce with the S&P 500 right back at its highs for the year. This week marks the last week of Q1 and portfolio managers who have been underinvested likely used the brief pullback as an opportunity to put more cash to work.

There isn't a lot of market moving news this morning. Fed Chairman Bernanke made some comments that job market conditions remain slack, which lends itself to the notion that the Fed will remain accomodative. This echoes comments made by other Fed officials last week.

Pending home sales for February fell -0.5% vs. a gain that was expected. But that has done little to stall this mornings rally.

Asian markets were relatively flat overnight, and Europe is higher this morning except for Spain which is selling off on budgetary concerns. If Spain flares up the way Greece did, it would likely be problematic for the markets.

The euro is also getting a bounce, and the weaker dollar is helping boost commodities. Oil prices are higher near $107, and natural gas prices are higher also. Gold prices are also bouncing to $1685, and silver and copper prices are up as well.

The 10-year yield is higher at 2.28%. Interestingly, the VIX isn't lower on today's rally and is holding in at 14.95. Recent VIX action has been somewhat perplexing and our higher volatility trade hasn't worked out.

Trading comment: Buyers are back in control today. I usually don't like to see a market that is up strong at the open. I prefer to see the market build its strength later in the day and close at its highs. These up opens leave to much time for sellers to step in knock the market back down, but we will have to see if buyers stay in there right into the close. Leading growth stocks continue to pace the market, and even though AAPL has taken a bit of a rest, PCLN remains on fire, as do ALXN, RAX, SWI, CHKP, the cloud stocks and a host of other.

KAM Advisors has long positions in AAPL, ALXN, CHKP, PCLN, and RAX

CAN BERNANKE BREAK THE DOLLAR RALLY?

In response to a bursting real estate and credit bubble in 2007 Bernanke's solution was to crank up the printing press and flood the world with dollar bills. Unfortunately it didn't solve our problems, it only made them worse. The real estate and credit bubbles stayed busted, but that liquidity had to land somewhere. In 2008 it went straight into the energy and agricultural markets spiking the price of crude, gasoline and food. This in turn collapsed a fragile global economy that was already reeling from the real estate implosion. The end result was the exact opposite of what Benjamin intended. Instead of halting the real estate collapse he just magnified the severity of the recession.

Unfortunately Bernanke has not learned from his past mistakes. The wicked sell off in 2010 was met with QE2. The even more severe decline in 2011, which should have initiated the next bear market and started the move down into the next four year cycle low, due in 2012, was aborted with additional money printing disguised as Operation Twist and the European version LTRO.

On the surface it looks like Bernanke has been successful. The economy has rebounded from near recession in 2011 but the unintended consequences are already in play as oil is now back above $100 a barrel and gasoline over $4 a gallon. Bernanke has steered the Titanic straight into the iceberg and now there's no turning back. If Ben doesn't raise rates and drain excess liquidity oil is going to continue to rise until it destroys the global economy again.

The dollar is at a very important juncture. The current daily cycle topped on day 11 which is right in the middle of being left or right translated. Left translated cycles are the hallmark of a declining market (lower lows and lower highs). 

Right translated cycles are associated with rising markets (higher highs and higher lows).

How this cycle plays out is going to determine the path for all other assets. The current daily cycle topped right in the middle of being right or left translated. As long as the impending cycle low holds above the February intermediate degree bottom then the pattern of higher highs and higher lows will still be intact and the dollar will still be on the upside of an intermediate cycle.

In this scenario I would expect the stock market to roll over soon and begin moving down into an intermediate cycle low in late April or early May. Gold's B-wave would resume after a short counter trend bounce and continue down to test the December lows.

 
If however, the dollar were to penetrate the February low it would signal that the intermediate cycle has already topped and the pattern has reversed to lower lows and lower highs. In that scenario we should see the dollar moving generally lower for the next 15-20 weeks.

In this scenario the runaway move in the stock market could continue for another 10-15 weeks, and gold's B-wave probably bottomed on Thursday as another shortened intermediate cycle.

This scenario would also trigger another leg higher for oil which will eventually poison the economic recovery. 

The next couple of weeks are going to be important. I'm expecting the first scenario where the dollar continues to make higher highs and higher lows, but I'm prepared to reverse course 180 degrees if Bernanke can break the rally and push the dollar through the February 29 low.

Nazz Looks To Keep Its Streak Alive

The markets are slightly lower in morning trade. For the week, the SPX is on pace for a decline of less than 1%. This would mark the first weekly loss in six weeks, and only the 2nd weekly decline in the last 12. As for the Nasdaq 100, it is on pace for its 12th consecutive weekly gain. That is quite a feat. I know than AAPL has had a lot to do with it, but it also shows how well large-cap growth stocks have bounced back so far this year after being out of favor in 2011.

There were a handful of earnings reports last night and this morning. Accenture (ACN) is seeing a positive reaction, but the others (KB Homes, Micron, Darden Restaurants, and Nike (NKE)) are all trading lower in reaction to earnings.

Asian markets were lower across the board last night, with widespread selloffs of 1% of greater. The dollar is selling off today, and that is helping commodities bounce.

Oil prices are higher at $107, and natural gas prices are bouncing from record low levels. Gold prices have also bounced to $1662, and silver and copper prices are higher as well.

The 10-year yield is fading a bit more, to 2.23%. And the VIX has really not had much of a bounce, even with yesterday's selloff. The VIX is down another 1% this morning back to 15.30.

Trading comment: Large-cap leading growth stocks have really led this rally lately. I know that most people thinks its all Apple all the time, but look at a stock like Priceline (PCLN), which has also been a monster. Look at the recent rebound in Google (GOOG), the cloud stocks like FFIV, CRM, and VMW; look at the old generals like MSFT, QCOM, and INTC. Look at new growth stocks like MNST, SCSS, ALXN, and ULTA. Predicting the remainder of any year from the early action is fraught with risk, but I tend to think that this strong action is a prelude to the rest of the year and that even though there will be corrections along the way I think growth stocks are going to continue to lead rallies.

KAM Advisors has long positions in ALXN, AAPL, GOOG, MNST, PCLN, SCSS, and ULTA

Will The 3-day Selloff Pattern Hold?

I am out of the office today, so my comments are going to be brief. Today is day 3 of the current selloff in equities. For the last several months, the third day of a pullback has market the low and offered a good entry point for dip buyers.

It remains to be seen if the pattern will hold or not. The indexes remain extended relative to their underlying moving averages. For the S&P 500, the first moving average that comes into play is the 20-day which is sitting near the 1380 level. The SPX is currently trading at 1390.

Asian markets were mostly higher overnight, but Europe is lower today on disappointing PMI data. The euro is also lower while the dollar is firm.

Commodities are weak across the board, with oil prices down to $104.60, natural gas prices down 3%, gold prices lower to $1635, and silver and copper prices down as well.

In corporate news, Fedex (FDX) and Lululemon (LULU) both beat earnings estimates but gave soft guidance and their stocks are lower. Dollar General (DG) topped estimates and raised guidance and its stock is higher.

The 10-year yield is easing back to 2.27%; and the volatility index is spiking +7% so far to 16.25.

Trading comment: It's too early to comment on the action, as we have to see if the bulls step up as usual and rally the market into the close. If they do, then I would stick to my comments that today (day 3) could market another short-term bottom in the pullback sequence. But if we close at the lows it is very possible the market still has some work to do on the downside before finding support. Big picture, I would expect some underinvested managers to use the opportunity to put more cash to work ahead of quarter end next week.

Tech Stocks Continue To Lead

The market is lower in early trading on the heels of a mild pullback in the indexes yesterday. Tech stocks are relative outperformers so far this morning with many of them trading higher so far. Energy stocks continue to lag in what looks like some sector rotation going on.

Helping tech sentiment was earnings out last night by Oracle (ORCL) which were better than expected and resulted in a nice pop for the stock.

Overnight, Asian markets were mixed. The dollar is higher today relative to the euro, with mixed effects on commodities. Oil prices are higher near $106.50, but nat gas is lower. Gold prices are also higher at $1650, but copper prices are down a bit.

In economic news, existing home sales for February came in at 4.59 million units, down slightly from last month's 4.63 million units but generally in-line with expectations.

Fed Chairman Bernanke and Treasury Sec. Geithner are testifying before Congress today about the European debt crisis. They keep harping on the risk to the taxpayer, but it is nearly impossible that the ECB wouldn't repay the loans and they also guarantee to adjust for any currency fluctuations. Pretty good credit if you ask me. Most of these Congressmen (and women) are basically clueless about modern day interbank finance, so it's painful to listen to them.

The 10-year yield is lower today to 2.31%. And the VIX is down -2.5% despite the selling in the market, down to 15.16.

Trading comment: Today is day 2 of the mild pullback, at least so far. This is kind of the pattern we have seen, and if the SPX continues to hold above 1400 I think it is likely that we will simply see another stair-step higher pattern into quarter end. Market leaders continue to hold up well despite the near-term handoff from energy stocks to the tech sector.

Ryan's Supply-Side 2012 Budget

There are a lot of really good things in Paul Ryan’s new budget, which is a stark contrast to the Obama budget. Ryan cuts spending by over $5 trillion, lowers the deficit by over $3 trillion, and brings the debt-to-GDP ratio down to 62 percent. All of these are ten-year totals.

Ryan also cuts back on small entitlements, block-granting them to the states. Then, of course, there’s the new and improved Medicare-reform plan.

But what I really like about this year’s Ryan budget is his singular emphasis on pro-growth, supply-side tax reform.

Working with Dave Camp, Ryan has laid out a great blueprint for Mitt Romney and the whole Republican party. In particular, while listening to the budget meister at a small luncheon for conservative journalists and think-tankers in Washington on Monday, what I heard again and again was an emphasis on economic growth.

This is not to say Ryan is not worried about spending, deficits, and debt, which of course he is. But his reform message to limit government really spends a lot of time on tax simplification, ending cronyist carve-outs and loopholes, and of course dropping the personal and corporate rates.

Growth solves a lot of problems. All those GDP ratios for spending, deficits, and debt look a lot better when the GDP denominator is rising rapidly. Not through inflation, but through new incentives to promote real growth.

Unfortunately, the first cut of the Ryan budget is based on CBO static estimates of growth and revenues. That is a budget-committee obligation. But I’m told that on Thursday we will get a different set of numbers based on dynamic scoring of lower tax-rate incentives. I’m guessing the growth difference is 3 percent static and 4 percent dynamic. Dropping tax rates as much as Ryan does, which reminds me of Reagan-era tax reform, could probably produce even more growth. Therefore, the budget could be balanced in a much shorter period of time with much lower debt ratios.

Let’s see what the second set of numbers brings.

China Growth Conerns Resurface

The market is lower in early trading, which is something I haven't said very much in recent weeks. Profit taking after the big run we've had could always be viewed as a factor, but it is still early in the day so we will have to see how the market finishes and how volume comes in.

One of the good things about recent selloffs is that they have been accompanied by lower volume levels, so they did not look like big distribution days.

Asian markets were lower overnight and Europe is down this morning. There have been some concerns swirling about China's growth rate and how much it will cool. This has the emerging market ETFs trading lower this morning, as well as commodities.

The dollar has also been firm (safety trade), which is weighing on commodities. Oil prices are lower to $105.90 and natural gas prices are lower also. Gold prices have eased back below $1650, with silver and copper prices lower as well.

Financial stocks are bucking the early weakness and trading higher while all other sectors are negative. Energy stocks are down the most so far. Defensive consumer staples are down only slightly as a group.

In corporate news, Tiffany (TIF) raised guidance and its stock is spiking. But Adobe (ADBE) reported disappointing earnings and its stock is lower.

The 10-year yield is slightly lower after another big spike higher yesterday. It is currently at 2.35%. The volatility index (VIX) is only 2% higher so far to 15.35. I think I would have expected a bigger pop in the VIX considering the low levels we are at.

Trading comment: Since the market bottomed last winter, most pullbacks along the way have been brief 1-3 day affairs. And each time the market quickly recovered to go on to make higher highs. It will be interesting to see if the same pattern appears this time around. But considering investor sentiment has yet to reach bullish extremes that have preceded longer market tops in the past, I would remain in dip buying mode. I have mentioned focusing on individual stocks, and I would add sector rotation to the mix. For example, if energy stocks continue to pullback they will likely present a good buying opportunity.

KAM Advisors has long positions in VXX

INTRADAY POST

And intraday post has been made to the website.

Can The Nazz Make It 12 In A Row?

The market put in another solid week last week, and is slightly higher again in early trading this morning. For its part, the Nasdaq has been up for 11 straight weeks. That's quite a streak and one that is likely to come to a halt soon.

Apple (AAPL) has certainly been doing its part to help buoy the index, and this morning AAPL investors got more good news in the form of a dividend and a share buyback. AAPL said it will institute a $2.65 quarterly dividend and commence a $10 billion share buyback. This will likely not put much of a dent in the growing cash hoard at Apple, but it is nice they are giving some back to shareholders.

The dividend is also likely to attract some value-type investors who have mandates that they can only hold dividend paying stocks. At $2.65 a quarter, the dividend yield would be about 1.8% at current levels.

Outside of that it is a lackluster Monday morning in terms of corporate newsflow.

Asian markets were mixed overnight, and Europe was a bit weak this morning. The dollar is up a little vs. the euro, and commodities are mixed as well. Oil prices are higher at $107.66 but natural gas prices are lower. Gold prices are higher to $1657 but silver prices are lower.

The 10-year yield is hanging on to last week's big spike higher and hovering around 2.31%. And the VIX is up 3% this morning to 14.95, still at 1-year lows.

Trading comment: Lots of fixed income vehicles, from ETFs to closed-end funds, saw sharp selloffs last week. This was likely a knee-jerk reaction to the spike higher in yields, but if this turns out similar to recent selloffs in fixed income funds it will just be another correction and nothing more. If these funds don't rally again and begin to show more long-term topping formations, that would be a stronger signal that the rotation out of the safety trade of bonds and into equities has some legs to it. Time will tell.

KAM Advisors has long positions in AAPL, VXX

COMMENT CLEANER

Will SPX 1400 Be A Ceiling?

The market is higher again in early trading. Yesterday the market sold off in the afternoon, but the damage to the market was minimal.

Economic data was solid this morning. Initial jobless claims were lower for the week, coming in at 351,000 and continuing claims were down also. The Philly Fed survey improved to 12.5 from 10.2 in February. And the Empire Manuf. index improved to 20.2 from 19.5 in February. So the economic data continues to show steady improvements in recent months.

Asian markets were up slightly overnight, while Europe is mixed this morning. Fitch Ratings lowered the outlook for the UK to 'negative' last night. But the euro is still getting a bounce relative to the dollar.

The lower dollar is helping commodities bounce a little. Gold prices are up a tad to $1651 and silver prices are higher as well. Oil prices are also up a little near $105.55.

The 10-year yield is holding on to yesterday's massive gains and sitting near 2.26%. And the VIX is roughly flat near 15.35.

Trading comment: The SPX is approaching that big round 1400 level. When the SPX got to 1300 it pretty much powered through it and then corrected to come back down and retest 1300 as support. But given how little correction we have had since SPX 1300 I don't anticipate the same action. More likely, the 1400 level will act as resistance the first time up and the market could pull back from current levels. Of course, I have been preaching not to let the action in the major indexes keep you out of making good investments.

KAM Advisors has long positions in VXX

Banks Stocks In Action

The market is up slightly in early trading, following its best rally of 2012 yesterday on the heels of the bank stress tests.

The latest bank stress tests showed that 15 of the 19 largest firms passed. Several of them announced dividend increase and share buybacks on the heels of the results. JPMorgan led the way by announcing a big divy hike and buyback before the Fed had even released the results from the tests. Banks stocks rallied strongly on the news with many of the big name stocks up 5-7% yesterday. Most of the banks are higher again today. But a few big banks that didn't pass include Citigroup, SunTrust (STI), and Metlife (MET).

Asian markets were mostly higher last night, except for Japan where investors were disappointed by the lack of increased monetary easing. Europe is also higher today, but the dollar is gaining relative to the euro.

The strong dollar is weighing on most commodities. Oil prices are flat near $106.75 but natural gas prices are lower. Gold prices are down further back to $1650, and silver and copper prices are lower as well. Gold prices are now back below their 200-day average, which is a negative technical development.

I have been harping on the 10-year yield lately and its inability to get above recent resistance around 2.10%. Today we are seeing a nice breakout above those levels with the 10-year yield reaching 2.23%. I view this as a positive development in that it both reflects an improving tone about the economy and hopefully some selling in bonds that could flow into the equity markets.

As for the VIX, it is up slightly after yesterday's big plunge lower and trading near 14.95. I have added some VXX positions for a trade and as a portfolio hedge as I think volatility levels have gotten quite low.

Trading comment: The S&P 500 almost touched 1400 this morning which is the highest level since June 2008. It is also the type of big round number where the market could pause to take a breather. Of course, AAPL continues to surge to new highs and with the banks back in favor we could see the market simply run right through SPX 1400. Sentiment indicators have yet to show excessive optimism but it will be interesting to see if this weeks action brings out more bulls.

KAM Advisors has long positions in AAPL, GLD

PORTFOLIO CHANGE

A portfolio change has been posted to the website.

Waiting On The Fed

The market is nicely higher in early trading. The S&P 500 has been able to surpass its previous highs above 1378 and is currently trading at its best levels since June 2008.

There is little in the way of market moving corporate news once again. In economic news, monthly retails sales came in better than expected at +1.1% for February.

The dollar is sporting gains again today, which is weighing on the commodity complex. Oil prices are flattish near $106.35; gold prices have dropped back below the $1700 level, and natural gas prices are down near $2.25; silver prices are lower as well.

Overnight action in Asian was positive, and Europe is showing gains this morning also.

The latest FOMC policy statement will be released later today at 2:15 EST. There is the usual chatter about whether Bernanke will mention more QE3. I doubt we will hear it, and more likely he will reiterate the slow pace of the recovery and that the Fed will remain accomodative.

The 10-year yield is getting a boost to 2.08%, a level that has acted as a ceiling for the last few months. And the VIX is down another -6% today to a 1-year low at 14.65. I think that the move lower in the VIX is getting long in the tooth, and I am now considering buying some volatility as a small hedge in portfolios.

Trading comment: The song remains the same. The market continues to ignore calls for a correction and today is making new recovery highs. We will have to see if the Fed announcement results in a sell the news type of reaction in the market. But judging by the VIX, fear continues to come out of this market. Despite the additions to equities, it is somewhat odd that we have not seen much in the way of outflows or selling of bonds. As such, I would view a breakout in the 10-year yield as a positive in that it could signal a move out of bonds by those who have been glued to the safety trade.

Monday Morning Musings

The markets are slightly lower in early trading, and there isn't a whole lot in the way of market moving news this morning.

Asian markets were slightly weak overnight. China posted larger than expected trade deficit and that has caused some to speculate that global demand for China's exports isn't as strong as it has been in recent quarters.

The dollar is relatively flat this morning, but most commodities are lower. Oil prices have eased back to $105.75 and natural gas is lower to $2.37. Gold prices are back below $1700 to $1697. Copper and silver prices are lower as well.

The financial sector which has been leading recently is the day's biggest laggard so far, while defensive utilities have resumed the lead.

The 10-year yield is sitting right at that 2.00% level that I keep mentioning. And the VIX is down a whopping -10% today new lows. It hasn't been this low $15.35 since July 2011. Of course that was before last summer's swoon which saw the VIX triple from the 15 level. A colleague told me that some of the weakness is due to traders rolling their positions to the new front month options, but I don't think that could account for all of this large decline.

Trading comment: I keep saying that hasn't been a great strategy to wait for the market to take a rest and then look to buy on the weakness. A better bet has been to simply focus on your individual stocks and add to them on weakness, which has come periodically more as a result of sector rotation than an overall market correction. Last week, the market experienced a brief 3-day pullback but that was quickly followed by some buying. That has left the S&P 500 just a few points away from its recent highs at 1378. Since every pullback has been quickly followed to a return to new highs, one would expect the SPX to surpass 1378 shortly. If it doesn't that would be a notable change in character. Of course, the Nasdaq has been up for 10 straight weeks so I would think a down week is coming at some point. But again, I am focused on the action in individual names. And AAPL continues to be a monster.

KAM Advisors has long positions in AAPL

INTERVIEW

Interview with the Tekoa Da Silva of the contrary investors cafe

QUIT MONEY DAY: APRIL 18

QUIT MONEY DAY: APRIL 18

"April 17 is Tax Filing Day, when we look back on a year of hours worked, salaries earned, and dollars spent. Never do we feel more entwined in the money system and its tentacle institutions of banks and government. Let's imagine greater independence from that system, and for one entire day, on April 18, neither spend, borrow, nor lend a single cent. Once you JOIN this event, invite all your friends!"      --Mark Sundeen

You can also join Quit Money Day on Facebook and invite your friends.

We plan to celebrate this day with a big event for the book in Mark's home town of Missoula, Montanna (see the events itinerary to also see other places I hope to be in the next months). 

Is Quitting Money for One Day Radical?

Yeah, many people think it's radical quitting money for one single day.  But consider the ancient tradition of our own culture: the Sabbath Day.  The Sabbath was Quit Money Day every single week, 52 weeks a year, plus holidays, which were also Quit Money Days!  Not only that, there were Sabbath years, every seventh year.  

 

Other cultures of the ancient world, some long before Judaism, practiced a Sabbath, as well as periodic times of forgiveness, like Jubilee, where all debts were forgiven.  The famous Rosetta Stone, in fact, is Ptolemy's anouncement of a kind of Jubillee, forgiving debt across Egypt.

But, if you're interested, let's focus on our own cultural tradition. 

I'm Not Here to Proselytize Religion

I'm not here to proselytize, to get non-religious people to follow any religion.  I'd say, in fact, that most non-religious people I know are better at practicing the ethics of religion than most the religious ones!  The non-religious world is, in fact, getting quite sick of bickering, self-righteousness, and violence among the three Abrahamic religions, the Abrahamic pot calling the Abrahamic kettle black!

But I'm also not on a secular agenda to bash people's faith, to convert religious to non-religious.  The point is to find and cultivate what is already good in every culture, every religion, every person.  This is not dreamy, wishful thinking.  In fact, we are deluded in wishful thinking when we deny the good we see in everybody, for the sake of promoting our own agendas!  It's not that we can't see good in every human, it's that we refuse to see good in every human.

Thus I dig for splendid diamonds in the rough in Abrahamic religions, in every religion, and I love digging for them.  Yeah, it gives me pleasure. 

Bottom line, all I care about is what motivates people to act in truth and love, whether religious or not religious. 

In short, because I grew up in Judeo-Christian culture, my mission is to encourage Christians and Jews to practice the principles of truth in our own religion, not just talk about them.  We must bring to light the gems already present, yet buried, right here in our own culture! 

So if you're interested in religion, read on.  If not, I'd be happy if you stopped here.



The Sabbath:
Center Candlestick,
Eternal Present,
Creation Now
Amidst 6 Days of Duality

The Sabbath is Quit Money Day, Every Week!

The Sabbath Day, according to the Torah, is Quit Money Day, every seventh day, 52 weeks a year.  The Sabbath is not necessarily about giving up work, but giving up work for money, giving up business, with zero money exchange [the Hebrew word for work in the 10 commandments is מְלָאכָה (mĕla'kah) meaning "business" as well as "possessions").  It is the day when domestic animals and agricultural land must rest.  And one of its very purposes is to let land rest to allow animals and poor people to take take freely of its produce!  (Exodus 23:10-12). 

This is an idea lost on Christians today, as it was lost on Pharisees in Jesus' time.  Religious people turned the Sabbath into a meaningless regulation, either that or ignore it.  When Jesus' disciples, who had no money or possessions, were gleaning food from fields, the Pharisees condemned them for "working" on the Sabbath, when the very purpose of the Sabbath was to let animals and poor people (who didn't recognize laws and sabbaths) to take freely!  "The Sabbath was made for man, not man for the Sabbath," Jesus replied to his accusers. 

The message Jesus and the apostles were proclaiming  was was not necessarily to do away with the Sabbath, but to make every day Sabbath, forgiving all debts, giving up possessions, freely giving and freely receiving!  And if you couldn't do this, then at least do it one day a week!  The traditional six days of work represented law and money, and the seventh day was Grace.  The one-day-per week Sabbath was a taste of Grace for those who weren't yet ready to give up money and possessions!

"If you do not fast from the world, you will not find the kingdom. If you do not observe the week as a sabbath you will not see the Father." (--Jesus, The Gospel of Thomas 27)

This is a concept also found in the Old Testament Psalms and the New Testament book of Hebrews, that the Sabbath is the Eternal Today we must enter into Now.  The very theme of the Apocalypse in the New Testament is, in fact, entering into this Rest with Jubilee trumpets, this Eternal Today, which is the End of Time, the Place of Truth where there is no money, no possession, and complete Forgiveness.  The very word apocalyse literally means uncovering what already is here and now!  It's not a future day in prophecy (which makes us shirk responsibility), it is Now! "Now is the accepted Time, Now is the Day of Salvation."

Not keeping the Sabbath was a grave transgression, according to the Jewish prophets, not because it was breaking an arbitrary rule of a volatile sky god in with irrational anger issues, but because of common sense: not letting living things rest from commerce was damaging both to the land and to the poor (Nehemiah 10:31 and 13:15-22, Amos 8:4-8, Isaiah 56:2-6 and 58:13, Jeremiah 17:27) .

Blowing the Shofar,
heralding in Jubilee

There were also Sabbath years, every seven and 49 years, called Jubilee, for letting the land rest, for the sake of plants, animals and the poor, and for forgiving all debts.

The Sabbath was instituted for people who had to live under money (under law) to at least set aside one day per week, and one year every seven years, to get a taste of Grace, to get a glimpse of what life is like before the fall from Grace (Gratis), what life is like before money.  Notice I say what life is like, not what life was like.  We must get out of the delusion that a better life was in the past (past Eden) or a better life will be in the future (future rapture).

Does Strengthening Economy Take QE3 Off The Table?

The dollar is rallying this morning on the heels of a better than expected jobs report. The stock market is also nicely higher, and lo and behold the S&P 500 is right back at its highs from last week.

Nonfarm payrolls rose by 227,000, above expectations. Private payrolls also beat expectations and grew by 233,000. The unemployment rate remained steady at 8.3%. With increasing signs of an improving economy, one has to wonder what those calling for QE3 will have to hang their hat on after this?

Overnight news that Greece's debt swap was met with better than 80% participation may have helped Asian markets rally, but it has done little to help the euro this morning vs. the strong dollar. The euro ETF (FXE) is sitting right on its 50-day support.

Commodities were lower this morning, but most have since rallied. Gold prices are higher to $1710, oil prices are up to $106.70, and copper and silver prices are higher as well.

The 10-year yield is bouncing to 2.05%, but it is still in this multi-month trading range that has not been able to get above 2.10%. As for the VIX, it is plunging this morning down -7% to 16.67. I am surprised by the sharp drop in the VIX, but looking at the chart it looks possible that we could see new lows in the VIX if the market keeps rallying.

Trading comment: The SPX is right back at its highs for the year. I said earlier this week that after the 3-day decline we wanted to step in and do some buying. Even though I thought the correction wasn't over, I stated that just going by the action in the major indexes wasn't the best strategy over the last several months. You have to follow your stocks, and add to them when they are showing good setups. Waiting for the market to correct more sometimes can keep you from making good individual decisions. Also, Colorado had a big win last night vs. Oregon. They play again tonight in the semi-finals of the PAC-12 tourney here in LA. Go Buffs!

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Eurozone Optimistic About Greek Bond Swap

The market is trading higher in early trading, seemingly taking most of its cues from overseas markets. There isn't a whole lot in terms of market moving economic data or corporate news in the U.S. this morning.

Overnight, Asian markets rallied strongly and Europe's markets are nicely higher this morning. There seems to be more confidence right now that Greece will be successful in its effort to conduct its debt swap. This can also been seen in the bond yields of other PIIGS countries which have started to ease a bit.

The ECB and the Bank of England both opted to keep rates at current levels. ECB Pres. Draghi hinted that the ECB could be done with its LTRO operations, and that now it's up to the member countries to take control of their debt situations and deal with them. He said that the ECB has done its part by taking the tail risk off the table.

The euro is also higher this morning at the expense of the dollar. This is helping commodities, with oil prices up to $106.75 and gold prices bouncing near $1695. Copper and silver prices are higher as well.

The 10-year yield is higher today at 1.99%, but still not able to get above that 2.00% level and stay there. As for the VIX, it broke back below its 50-day yesterday and is moving lower again today. Currently it is down -4.75% to 18.15 as fear quickly comes back out of the market.

Trading comment: Yesterday's snapback rally came on very low volume, which will lead many participants to question the conviction behind the buying. It is possible we could see the same type of action today, although it is still early so first we need to see if these early gains stick. Since I have said this year I think it will be more productive to focus on individual stock action and not the major indexes, I am looking for stocks that have already corrected or appear poised to break higher from recent consolidations. Some candidates I am looking at include: SRCL, CTSH, LNKD, BMY, and AGNC to name a few.

KAM Advisors has long positions in AGNC, BMY, CTSH, LNKD, and SRCL

Is The Market Selloff Over?

The market is getting a small bounce in early trading, but so far it feels like a weak attempt. Lots of folks are pointing out that yesterday was the biggest decline of the year, but it hasn't exactly been a normal start to the year. As such, we were overdue for a day like yesterday, which wasn't even that bad of a selloff in the big picture scheme.

This morning's ADP Employment report was solid at 216,00 payrolls in February. That's up from last month's 173,000. Hopefully this translates into a good govt. payrolls report on Friday. Q4 productivity was also revised higher to 0.9%, although there was a big jump in unit labor costs.

Asian markets were lower overnight, but Europe is higher this morning despite the big Greek debt swap that is taking place soon. There isn't much action in the euro or the dollar.

Commodities got hit yesterday, and are relatively flat so far today. Oil prices are down slightly to $104.50, and gold prices are up just a bit to $1677.

The 10-year yield is getting a small bounce to 1.96%. And the VIX is down -3.5% so far back near 20.15 after a big spike higher yesterday. The VIX is still above its 50-day average which is hovering around 19.60 and we will have to see if it acts as support.

Trading comment: Everyone wants to know if yesterday was the end of the selling? I think that is unlikely. We have seen plenty of one-day pullback over the last few months, but I think the breaking of that uptrend line that's been in place means that the market could have a bit more consolidating to do. I still don't think it's going to be anything other than a mild correction though. The S&P 500 is still well above its uptrending 50-day average (currently 1323), and I think we could see the senior index come closer to this support before all is said and done. I covered a bit more of our etf hedges yesterday, and would look to start doing some buying on any further weakness in the market.

HAS THE CORRECTION FINALLY BEGUN?

Today is a classic example of why I have been warning traders not to push the long side of the stock market. When these creeper trends finally break they often generate a crash or semi crash type of profit-taking event. 

The last 2 1/2 months were a classic example of why I have been warning traders not to short the stock market. These creeper trends can go on much longer than many people expect and shorts just end up getting whipsawed out multiple times until they're so shell shocked that they can't hold on when they finally do catch the top.

All in all the correct strategy was to remain in cash until the profit-taking event occurred and then buy as close to the bottom as possible.

If I had to guess I would say this will probably turn into a two step down affair followed by a two-month volatile consolidation as the dollar rally progresses. 

You might recall in my last post I mentioned that the dollar would need to get on the upside of an intermediate cycle before stocks had any realistic chance of correcting. I outlined the conditions that would confirm that the dollar had formed an intermediate cycle low. Those conditions have now been met and it appears that the stock market is ready to deliver the much anticipated profit-taking event.

During this period gold should drift generally downward over the next couple of months as the dollar rallies.

There will be plenty of false rallies (just like last Thursday) to sucker traders back in. But I really doubt gold will put in a lasting bottom until the dollar's intermediate cycle tops. Barring a public announcement of QE3, that is unlikely to happen until sentiment reaches extremes again. That almost always requires a move to new highs and usually takes a minimum of one and a half to two months to generate that kind of bullish sentiment.

As I have been warning traders for months the dollar's rally out of its three year cycle low almost certainly isn't done yet. The rally out of a three year cycle low usually lasts at least a year, and that's the norm in a secular bear market. Since the three year cycle low bottomed in May of 2011 it's unlikely that we would see a final top until at least May of this year. And since the three year cycle low in 2011 held above the three year cycle low that occurred in 2008, there is even a case to be made that the dollar has now entered a secular bull market.

This would imply that despite Bernanke's best efforts the forces of deflation may be overwhelming the central bank's efforts to reflate. However I'm confident that if 10 trillion isn't enough Bernanke will not hesitate to print 50 trillion. I have little doubt that no matter how this progresses it is going to end in a massive inflationary currency crisis.

A Change In Character For The Market?

The market is down sharply in early trading, with the Dow on pace for its first triple digit decline on 2012. Of course, it's still early so we could see dip buyers step in again before the close. But with the markets up for 8 of the last 9 weeks, many participants would welcome seeing the market digest some of its recent gains.

There isn't much in the way of market moving news this morning, so people are reaching for headlines to attach to the selling. Some are looking at China's lower GDP forecast, but that news was out yesterday. Others are pointing to the -0.3% decline in Q4 GDP for the eurozone, but this was unchanged from the previous forecast so it's not new information. One new datapoint was Brazil posting lower growth than expected. As such the emerging markets ETF (EEM) is down -3.35% in early trading.

Asian markets were lower overnight, with China down -1.4%. Europe is lower this morning, with some chatter that there is concern about Greece's upcoming bond swap later this week. The euro is also lower today, and the flight to safety is boosting the dollar.

Commodities are lower across the board, with oil prices down near $105 and gold prices back below $1700 closer to $1672.

The 10-year yield has dipped back below 2.00% to 1.94% currently. And the big surprise is the 15% spike in the VIX that has taken it back above the 20 level to 20.60. The VIX has been in a downtrend for months, and this is the first time the VIX has been above its 50-day average since the day after Thanksgiving (11/25).

Trading comment: Today will be an interesting day. Everyone has been saying that they are waiting for a pullback in the market to do more buying. But I posed yesterday that if the decline came swiftly, it would shake the dip-buyer's confidence. We will probably hear some of that today, with people shifting their tunes and saying this is probably the beginning of a correction. Given that the sentiment indicators never reached bullish extremes, I think that this pullback will likely be of the shallow variety. As such, I want to stick my toe in the water and start to do a little nibbling today. If the market continues to slide, I will leave myself room to do more buying on further weakness.

One-on-One with Mitt Romney (Part I)

In my interview with Mitt Romney yesterday he stayed on message for growth, jobs, less debt, and smaller government. He reaffirmed that “he won’t set his hair on fire”, meaning no splashy off message statements to distract from his fundamental economic push. He acknowledged that the primaries have made him a much tougher, better candidate and more prepared to carry the fight to Obama.

He emphasized his 20 percent supply-side reduction in income tax rates. And interestingly, in response to my question, he said he would take a look at indexing the capital gains tax for inflation. That’s a pro-growth idea supply-siders have pushed for many years. I hope he finally adopts it.

One-on-One with Mitt Romney (Part 2)

Portfolio Change

A portfolio change has been posted to the website.

Monday Morning Musings

The market is lower in early trading on relatively light news and probably a dose of profit taking. The big news overnight was the announcement out of China that they will target growth of 7.5%, which would mark the slowest growth since 2005.

China is struggling with the goal of increasing consumption and the domestic demand within its economy and trying to decrease the export and govt. investment side of the equation. Asian markets were lower overnight following the announcement.

In corporate news, AIG said it will sell its shares of AIA and use the expected proceeds of roughly $6 billion to reduce the balance it still owes the US Treasury Dept. In other news, BP has reached a settlement regarding the Gulf spill oil claims for $7.8 billion.

In economic news, the ISM Services Index rose to a very strong reading of 57.3 in February from 56.8 last month. This is a fairly strong datapoint, considering the services sector makes up roughly two-thirds of the economy.

Energy prices and materials stocks are lower following the China news. Oil prices are lower to $106.22 and gold prices have fallen back to $1700. Copper and silver prices are down as well.

The 10-year yield is hovering just below the psychological 2.00% level. And the VIX is spiking 8% higher this morning near 18.70. I am hearing options players in the VIX are increasing their bets that the recent rally is getting long in the tooth and a correction is near.

Trading comment: The consensus opinion seems to be that the market should experience a mild pullback and that such a pullback will be a buying opportunity. Since the consensus forecast rarely comes to fruition in the manner most are expecting, it is likley that either the market will continue to stair-step higher, or we will get a sharper correction than most expect and that will startle the conviction of the dip buyers who have been waiting for a pullback. Investor sentiment has yet to reach extreme bullish levels seen at prior market tops. As such, we are going to keep our focus on how our stocks are acting and not be overly concerned with taking our cues from the major averages.

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Weekly Recap

Here is the weekly recap from Briefing.com:

Stocks finished the week in lackluster fashion, but the S&P 500 still posted another weekly gain -- the eighth in nine weeks. Commodities were cut down, though.

Early action was choppy and without leadership. It was also undermined by weakness in the Energy sector, which came under pressure in conjunction with lower oil prices. The Energy sector settled with a 1.1% loss, which is worse than what any other sector suffered, while oil closed pit trade with a 1.9% loss at $106.68 per barrel. Earlier this week oil hit a multi-month high near $110 per barrel.

The major equity averages set impressive marks of their own earlier this week. The Nasdaq notched its highest level in more than a decade, while the Dow and S&P 500 both printed their best intraday levels since 2008. Along the way the Nasdaq Composite kissed the 3,000 mark, but failed to hold its ground there. The Dow closed above the psychologically significant 13,000 line after a few failed attempts, but was backed down by week's end.

With the major equity averages trading at such heady levels, many pundits are predicting a pullback, especially since stocks are showing some signs of fatigue. In anticipation of possible volatility, there was strong rotation into the dollar. The dollar marked its lowest level of the past three months earlier this week, but it finished out the week in impressive fashion. Its 0.8% gain on Friday helped fuel a weekly gain of 1.2%. Efforts to reduce risk were more pronounced among commodities. While oil's tumble made the most headlines, the rest of the complex was also clipped aggressively. That resulted in a 1.0% loss for the CRB Index on Friday. It fell 1.5% for the week.

Share volume has been paltry all week and was especially pathetic on Friday. Against an uncertain near-term outlook for the market, the absence of corporate news or economic data of consequence suppressed share volume, which barely totaled 520 million shares on the NYSE.

Market participants got a substantial helping of data on Thursday, overshadowing a raft of same-store sales results, which actually proved impressive.

The latest initial jobless claims count totaled 351,000, which is little changed from the prior week's tally of 353,000, but also on par with the 355,000 claims that had been expected, on average, among economists polled by Briefing.com. The numbers were supportive of an improving labor market picture, even though the headline unemployment rate remains elevated.

Personal spending increased in January by 0.2%, but income increased by 0.3%. Neither was as strong as what had been expected -- the Briefing.com consensus called for a 0.4% increase in both pieces of data.

The ISM Manufacturing Index fell to 52.4 in February from 54.1 in the prior month, but it still suggested that manufacturing activity expanded during the month. Nonetheless, expectations called for an improvement to 54.7, making the report a disappointment.

Construction spending for January also proved displeasing. It slipped by 0.1%, which isn't drastic, but it came in stark contrast with expectations for a 1.0% increase.

Fed Chairman Bernanke delivered a semiannual monetary policy report to the Senate Banking Committee on Thursday, but his comments reflected those he delivered to the House Financial Services Committee on Wednesday. Altogether the Chairman's remarks weren't surprising, but the lack of reassurance regarding the Fed's commitment to an accommodative monetary policy was credited for inviting selling interest.

Prior to Bernanke's report market participants learned that fourth quarter GDP was revised upward to a clip of 3.0%, which is greater than the 2.8% that had been reported in the advance reading. The upward revision came as a surprise since no change had been expected, but there response to the news was restrained.

Consistent with an improving macro picture, the Fed's Beige Book indicated that overall economic activity continued to increase at a modest to moderate pace in January and early February. That's not to say that all activity is consistently improving, though.

Data unveiled earlier in the week indicated that durable goods orders fell in January by 4.0%, which is far worse than the 1.4% decline. The steeper-than-expected drop follows an upwardly revised 3.2% increase in the prior month. Excluding transportation, durable goods orders declined during January by 3.2%, which contrasts sharply with the 0.2% increase that many economists had expected to follow a downwardly revised increase of 2.1% in the prior month.

The Conference Board's Consumer Confidence Index ran up 70.8 in February. It was at only 61.5 the month before. Many had expected only a modest improvement to 62.5. Sentiment surrounding housing improved with news that pending home sales increased by 2.0% in January. That was double the pace that had been generally predicted among economists.

Europe was in sharp focus at the start of the week because of news that G-20 officials want eurozone officials to establish additional financial safeguards before more funds are made available to the International Monetary Fund for commitment to the continent. It came back into focus by mid-week because of news that more than 800 banks in Europe cumulatively borrowed more than $700 billion in three-year loans through the second installment of its LTRO operation. Reports of individual funding by week's end helped bolster confidence in several European banks.

There wasn't a great deal of corporate news in play this week, but Apple (AAPL 545.18, +0.71) made headlines when its market cap ballooned to more than a half of a trillion dollars.

Earnings announcements were relatively limited, but Transocean (RIG 54.19, +0.62) posted numbers that were met with a positive response earlier this week. Home improvement retailer Lowe's (LOW 28.13, -0.25) announced quarterly results that featured an upside earnings surprise.

Light Day For Market Moving News

The markets are mixed in early trading on a very light morning in terms of newsflow. The S&P is down slightly while the Nasdaq is up a touch. There are really no big earnings announcements to speak of, no economic reports on the calendar, and no rumors or big announcements coming out of Europe. As such, I expect a light volume day without too much fanfare.

The big news of the day is the IPO of YELP. I use this app on my iphone, but its too early to say how profitable this company will be. In my experience, its often better not to chase these IPOs and wait at least a few months for them to settle in and created their first consolidation base.

WYNN has been bouncing lately, but the stock is halted this morning after opening up over 6% on news pending. No idea what it could be that would cause them to halt the stock. My guess is it is something to do with the Okada dispute.

Asian markets were higher overnight, led by a 1.4% gain in China. The dollar is higher again today vs. the euro, and near a 2-week high. This is weighing on commodities with oil prices weaker to $107.60 and gold prices down a little near $1714.

The 10-year yield has fallen back below the 2.00% level. How many times have we seen this in the last year? It is currently at 1.98%. And the VIX is flat around 17.25.

Trading comment: There are more calls this morning that the market is showing some fatigue and in need of a rest. With so many people looking for it, my first inclination is to say that we likely won't get what the consensus is hoping for. But there is a chance that we could get a quick, sharp correction that startles investors and makes them question their 'buy the dip' intentions. We still haven't seen the big spike in bullish sentiment to extreme levels, but just the fact that the market has been up in 8 of the last 9 weeks lends itself to the notion that a correction would be health. Last, did you see that Birinyi said the S&P 500 could reach 1700? That would be something. Have a good weekend--

PORTFOLIO CHANGE

A portfolio change has been posted to the website. And I am turning the comments section back on.

A Good Man

Sincere condolences to the Breitbart family on the terrible passing of Andrew. He was a smart, innovative, path-breaking media leader. And a good man. His appearances on our show always sizzled. He broke so many important stories. At 43, he passed way too soon. A tragedy. May he rest in peace. God bless.

Can Apple Continue Its Parabolic Move?

The market is higher in early trading, quickly bouncing back from yesterday's mild selloff.

In the manufacturing sector we have seen a string of improving activity readings in recent months. Today's ISM is the first datapoint to show some slowing. The ISM Manuf. index for February fell to 52.4 from 54.1 the prior month. Yesterday's Chicago PMI reading was solid, so we will have to wait and see if this ISM is the start of a trend or just a one-off weaker reading.

Same-store sales reports for retailers came out this morning and are generally positive. This likely coincides with the improving consumer confidence readings we have seen recently. Hopefully this continues and starts to boost the economy at which point we could get a mini virtuous cycle going. Further improvements in the housing sector would also help in that regard.

Gold and silver prices are bouncing back a little this morning from yesterday's sharp selloff. Some people pointed to Chairman Bernanke's speech yesterday and the lack of a mention for further QE3 in his comments. I think that may have been a very small part of it, but I don't think too many traders had their hopes up on more imminent quantitative easing.

The volume in the GLD and SLV was extremely high. And the fact that it came on the last day of the month to me looks like it could have been lots of hedgies scrambling to lock in profits on the last day of the month and all rushing to sell at the same time as the price action continued to deteriorate.

Asian markets were lower overnight, but Europe is higher this morning.

Materials stocks are leading the early action, while defensive consumer staples are lagging. This is pretty much the mirror opposite of yesterday's action.

Oil prices are up a bit to $107.75, and gold prices are higher near $1722. The 10-year yield is getting a boost above the 2.00% level to 2.04% currently. And the VIX is down -4% early to 17.75. While the VIX is still in an overall downtrend, it looks like it could be starting to form a bottoming base.

Trading comment: The parabolic move in Apple (AAPL) looks unsustainable to me. It is still our largest position overall, so I'm not complaining, but the history of this type of action in stocks always seems to slow. It would not be surprising at all to see the stock remain firm into next week's Apple event when they announce the iPad3 and then for the stock to selloff. I likely won't do much trimming ahead of that event as I still think AAPL shares are cheap relative to earnings and that despite whatever correction could ensue the stock should still be higher at year-end. I don't want to sound complacent, I just think that the stock has been undervalued for a long-time and its finally starting to get upward revisions to its valuation by the market.

KAM Advisors has long positions in AAPL, GLD, SLV