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