While Asian markets were lower overnight, European markets have bounced this morning.
In economic news, jobless claims for the week fell below 400,000 for the first time in four months. So that is good news on the jobs front.
In corporate news, strong earnings from Cisco (CSCO) have boosted that stock by +15% and emboldened dip buyers in the Nasdaq. Kohl's (KSS) also reported strong numbers, which is boosting retail stocks. All 10 economic sectors are higher today, led by a snapback in financials.
The flight-to-safety trade is being taken off slightly today, as gold prices have fallen back to $1757, and Treasuries are being sold for the first time in weeks. That has pushed the 10-year yield to a still very low 2.23%, up 9 bps on the day.
The volatility index is down only 5% today, despite the major indexes up nearly 3% so far. That is not as big of a drop as I would like to see, and probably indicates we still have some big swings ahead of us.
Oil prices are still higher today at $83.65.
Trading comment: The market is still chopping around and trying to build some support levels from which to stage a bigger bounce. It is good that we have held the recent lows from this week, but we have not been able to take out any overhead resistance levels yet. I would like to see the S&P 500 take out the SPX 1172 level to signal more upside. I have raised a little cash, but would look to do another round of selling if we could rally closer to 1200. I think the market is likely to be rangebound for awhile, with SPX 1100 acting as the lower band, and something like SPX 1200-1250 serving as the upper. But first we have to see if the market can rally towards those levels. My guess is its going to take some good news out of Europe that they are taking steps to get their arms around the debt issues and perceived credit crunch.
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