Our markets are mixed in early trading with the Nasdaq pulling back after leading yesterday. There is no economic data of note today but we do have another wave of earnings reports.
Asian markets were mostly higher overnight led by Japan. Japan's markets had been closed for 2 days but surged upon reopening 3.6% above the 14,000 level for the first time since June 2008. Also, the Reserve Bank of Australia surprised markets with a 25 basis point rate cut to 2.75%.
European indexes are also higher today. German factory orders rose 2.2%. Swiss unemployment held steady at 3.1%. And EC commissioner Olli Rehn said its too soon to determine if Slovenia needs a bailout.
Among stocks moving after reporting earnings:
Stocks rising on earnings: FOSL, HCN, DTV, DFT, STE, MELI, NSM
Stocks falling on earnings: MR, PRGO, TAP, TDG, DISCA, FSLR
The dollar is roughly flat today but commodities are broadly lower. Gold is down $20 to $1447. Oil prices are weaker near $95.44. Silver and copper prices are also weaker.
The 10-year yield is slightly higher to 1.78%. And the VIX is only up a touch and still at very low absolute levels at 12.75.
Trading comment: This market is really relentless. It does seem like in the short-term we are due for a bit of a pause, but other than that there are still no signs pointing to any change in character for the market. Obviously the market can't continue like this indefinitely, but the question is what levels do we climb to before we get any correction of substance. Certainly not worth sitting on the sidelines while so many stocks continue to perform well. We are taking a closer look at DVA, which is an example of a stock that reported good earnings but has pulled back since.
7 Mayıs 2013 Salı
6 Mayıs 2013 Pazartesi
Monday Morning Musings
The market is slightly higher in early trading following Friday's big rally. There is no notable economic data out today and overseas action was mixed.
Overseas market action was mixed. Asian markets were mostly higher overnight. Hong Kong and China both gained over 1%. China's HSBC Services PMI declined to 51.1 from 54.3.
In Europe most markets are lower despite some improvement in the services PMI readings. German, France, and Italy all reported services PMI readings higher than the previous month. The overall Eurozone services PMI rose to 47.0 from 46.6. But it still needs to get above 50 to move back into an expansionary reading (not contraction).
Among the sector ETFs, financials are leading the early action while normally defensive utilities are down the most so far.
The Nasdaq is up a little more than the S&P 500, led by AAPL which has been acting better since reporting earnings. Growth stocks are starting to lead the market again. Google is breaking out to new highs, and 3D printing stocks like DDD are recovering nicely.
The dollar is higher today and commodities are mixed. Oil prices are a bit lower near $95.35. Gold prices are up a tad around $1467. But silver prices are lower as are copper.
The 10-year yield is roughly flat at 1.75%. And the volatility index is 2% higher but still at a very low absolute level of 13.12.
Trading comment: With all of the major indices at new highs it's hard to fight this market. We still expect to see some rotation from the defensive dividend type stocks that led most of the year so far into more traditional growth stocks that have lagged. Our strategy hasn't changed there. In terms of asset allocation we have been looking for spots to add to overall equity exposure but the good buying opportunities have been few and far between. Not sure how long it can last in that fashion, but in the near-term it sure feels like more of the same.
KAM Advisors has long positions in AAPL, DDD, GOOG
Overseas market action was mixed. Asian markets were mostly higher overnight. Hong Kong and China both gained over 1%. China's HSBC Services PMI declined to 51.1 from 54.3.
In Europe most markets are lower despite some improvement in the services PMI readings. German, France, and Italy all reported services PMI readings higher than the previous month. The overall Eurozone services PMI rose to 47.0 from 46.6. But it still needs to get above 50 to move back into an expansionary reading (not contraction).
Among the sector ETFs, financials are leading the early action while normally defensive utilities are down the most so far.
The Nasdaq is up a little more than the S&P 500, led by AAPL which has been acting better since reporting earnings. Growth stocks are starting to lead the market again. Google is breaking out to new highs, and 3D printing stocks like DDD are recovering nicely.
The dollar is higher today and commodities are mixed. Oil prices are a bit lower near $95.35. Gold prices are up a tad around $1467. But silver prices are lower as are copper.
The 10-year yield is roughly flat at 1.75%. And the volatility index is 2% higher but still at a very low absolute level of 13.12.
Trading comment: With all of the major indices at new highs it's hard to fight this market. We still expect to see some rotation from the defensive dividend type stocks that led most of the year so far into more traditional growth stocks that have lagged. Our strategy hasn't changed there. In terms of asset allocation we have been looking for spots to add to overall equity exposure but the good buying opportunities have been few and far between. Not sure how long it can last in that fashion, but in the near-term it sure feels like more of the same.
KAM Advisors has long positions in AAPL, DDD, GOOG
5 Mayıs 2013 Pazar
BUY ONE GET ONE FREE
I know a great many people have gotten discouraged during the last 6 months. Many have probably gotten knocked off the bull, and some may even buy into the end of the bull market nonsense that many analysts have been spouting lately.
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
I can assure you the gold bull is not dead. Human nature hasn't changed. Bernanke's printing press hasn't stopped. The Dow:gold ratio hasn't reached 1:1 and the world hasn't solved it's ever growing debt problem.
Gold just suffered a minor manipulation event after QE4 that drove price back below $1700 and held it there until the dollar rallied out of it's intermediate cycle low. Then big money manufactured a stop run at the $1523 level to trigger a climax selling event. They used that panic to transfer I estimate somewhere between a quarter to a half trillion dollars worth of shares in ETF's, mining stock, and physical from weak hands to strong hands.
These players now have huge positions in preparation for either another leg up, or the final bubble phase of the secular bull market. If that's the case then gold should rally for about another year and a half with a final parabolic blowoff top sometime in late 2014 or early 2015.
A top in 2015 would culminate a 14-15 year trend which is about normal for a secular bull move.
As hard as it is to do right now this is the time traders need to be positioning for the next, or the last leg up in this bull market.
For the next couple of days I'm going to make an offer to any expired subscribers, buy one get one free. Buy a one month subscription and I will give you the second month free. This should be long enough to get you through the bottoming process and far enough along to convince everyone the bull market isn't finished. At that point you can decide whether to let your subscription expire or continue.
Make sure you let me know that you are a returning subscriber when you subscribe. I will email you instructions on how to turn off auto renew and get your second month free.
OFFER EXPIRED
3 Mayıs 2013 Cuma
STRETCHING, STRETCHING, STRETCHING
The runaway move in the stock market that we have been watching over the last few months continues to stretch higher and longer. Let me emphasize again, these things always end badly. Usually in some kind of crash, or semi crash.
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
I strongly advise traders not to chase this move. It's way too late and risk is extremely high. If you don't time the exit perfectly you risk getting caught in the crash.
The way to correctly trade a runaway move like this, is to wait patiently for the crash to unfold, and then buy long as the Fed doubles down on QE in the attempt to reflate asset prices.
The crash could happen at any time, but based on the intermediate dollar cycle, which is due to bottom in late June or early July, I'm expecting the stock market swoon to correspond with the dollar rallying out of that major bottom. So my best guess is in late June or early July we will see this artificial rally come crumbling down.
Let me emphasize that while I think the crash is going to occur later this summer, there is no guarantee it can't happen sooner.
On a side note: I heard a commercial yesterday in Las Vegas for a seminar on how to get rich flipping houses. Seriously? Are we really stupid enough to go down that road again?
2 Mayıs 2013 Perşembe
Sell in May?
I got in late this morning as I was on kids duty, so I didn't post my usual market notes. But here is an article I just posted on Wall St. All-Starts about a hotly debated topic right now--
http://wallstreetallstars.com/my-2-cents-on-sell-in-may/
http://wallstreetallstars.com/my-2-cents-on-sell-in-may/
1 Mayıs 2013 Çarşamba
Stocks Retreat On Light Economic Data
The market is under selling pressure in early trading after a weaker than expected jobs report and some additional economic data that came in weaker than expected.
The April ADP Employment report showed the private sector added 119,000 jobs in April, but this was below expectations for 155,000 jobs. Additionally, construction spending declined -1.7% in March which was well below consensus.
The other concern was China's manufacturing PMI data which eased to 50.6 from 50.9 previously. It is still barely above the 50 level that marks the difference between expansion and contraction in the industry, but it highlights concerns over a slowdown there.
Another odd market indicator is the action in copper. The copper etf (JJC) is near 3-year lows today. Considering the forecasts for a pickup in 2H global economic activity, you sure wouldn't sense it from the action in copper (which is supposed to be very economically sensitive).
Most Asian markets as well as markets in Europe were closed for their Labor Day holiday.
The 10-year yield is falling further on the weak economic data. The yield is all the way back to 1.63%, near its December lows. For the last year or so the 10-year has basically traded in this 1.50% - 2.00% range. We think its likely the lower end of this range holds and the 10-year works its way higher.
The volatility index is 6% higher today to 14.30, but still below the 15 level we have been using as a key level to watch.
Trading comment: This is day 1 of a mild pullback so far. Odds favor more of the same action, despite the crowd who cites the 'Sell in May and Go Away' axiom. The market ramped up pretty rapidly from its recent test of the 50-day average to put it in position for new highs. But its likely we could see some sideways consolidation first as the markets internal energy gets rebuilt for a solid move above the SPX 1600 level.
The April ADP Employment report showed the private sector added 119,000 jobs in April, but this was below expectations for 155,000 jobs. Additionally, construction spending declined -1.7% in March which was well below consensus.
The other concern was China's manufacturing PMI data which eased to 50.6 from 50.9 previously. It is still barely above the 50 level that marks the difference between expansion and contraction in the industry, but it highlights concerns over a slowdown there.
Another odd market indicator is the action in copper. The copper etf (JJC) is near 3-year lows today. Considering the forecasts for a pickup in 2H global economic activity, you sure wouldn't sense it from the action in copper (which is supposed to be very economically sensitive).
Most Asian markets as well as markets in Europe were closed for their Labor Day holiday.
The 10-year yield is falling further on the weak economic data. The yield is all the way back to 1.63%, near its December lows. For the last year or so the 10-year has basically traded in this 1.50% - 2.00% range. We think its likely the lower end of this range holds and the 10-year works its way higher.
The volatility index is 6% higher today to 14.30, but still below the 15 level we have been using as a key level to watch.
Trading comment: This is day 1 of a mild pullback so far. Odds favor more of the same action, despite the crowd who cites the 'Sell in May and Go Away' axiom. The market ramped up pretty rapidly from its recent test of the 50-day average to put it in position for new highs. But its likely we could see some sideways consolidation first as the markets internal energy gets rebuilt for a solid move above the SPX 1600 level.
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