Asia was mixed overnight, with some floods in Thailand that closed factories. But China was able to bounce +3.1%. Europe is higher this morning on optimism that Slovakia will pass the EFSF plan after it was voted down yesterday.
The euro is also getting a bounce on the news, pressuring the dollar. Commodities are higher across the board, led by copper (+3.5%). Gold prices are rallying back to $1680, while oil prices are roughly flat near $85.75.
In earnings news, although Alcoa (AA) reported a miss its stock is only down slightly. But Pepsico (PEP) and Infosys (INFY) both reported solid results and their stocks are up nicely. INFY's earnings is also boosting one of our holdings that I like best in the space, Cognizant Tech (CTSH). From this point, earnings season will continue to heat up, but at least its getting off to a solid start.
The 10-year yield is also getting a nice lift higher as recession fears are moving to the back burner, at least for the time being. Today the yield is all the way back to 2.21%.
As for the VIX, it is down -7.7% currently and knocking on the door - or I should say the floor - of that 30 level that I have been talking about. A break below this level would be a good sign for the bulls.
Trading comment: With the market rallying 6 of the last 7 days, we are no longer oversold and are short-term overbought. So I don't want to chase anything here, and I think it is likely we will see some consolidation in the near-term. The key for the major indexes will be that they hold their 50-day averages on any pullback. Those 50-day averages have been acting as resistance for the last few months, and if we can convert that resistance into support it would be another bullish sign for the market.
long CTSH
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