Back to the markets, after last weeks substantial rally, the markets are doing a good job of hanging on to the gains so far.
Moody's downgraded Portugal's debt yesterday, which is weighing on Europe's markets and also the euro. The resultant strength in the dollar is pressuring most commodities, although gold is higher near $1529. Oil prices are only slightly lower to $96.75. But most ag prices are lower.
In economic news, the ISM Services index came in lower than expectations at 53.3 vs. 54.6 last month.
Asian markets were mixed overnight. The PBOC there hiked its key interest rate by another basis points. And there were some reports out about the size of bank loans to local govts being larger than previously thought.
Financials are the weakest group this morning, while industrials are the strongest so far.
The 10-year yield is lower to 3.09%, after briefly topping 3.20% last week; the VIX is up +4.75% today to 16.82, bouncing off last week's low levels of 16.
Trading comment: Last week's sharp rally was surprising to most, including yours truly. I think it had more to do with hedge funds being out of position (read: too short) than a new era of bullishness coming in. Either way, it was nice to see, and many stocks participated. That said, I don't think it is time to chase the strength too much. The market is very overbought at these levels, so some rest and consolidation is in order. I'll be watching to see for any new leadership, as well as how current leading stocks act in the face of new breakouts. The macro backdrop, with sovereign debt issues surfacing, could remain a headwind.
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