Financials are leading the early action. This despite Fitch downgrading the debt ratings of Bank of America, Goldman Sachs, and several European banks.
In economic news, the overall CPI came in flat for November, which was lower than consensus expectations. The core CPI rose 0.2%.
Asian markets were higher overnight, and most European markets are up this morning as euro bonds have seen a pullback in yields which has helped improve sentiment for the time being. The latest country looking for a bailout from the EU and IMF is Hungary.
The bounce in the euro and pullback in the dollar is helping gold prices bounce back to the $1600 level following a sharp 3-4 day selloff in the yellow metal. Oil prices are roughly flat near the $94 level. (We are still short oil via the SCO etf).
The 10-year yield continues to languish and has fallen all the way down to 1.86%. The bond market would seem to be pricing in more of an economic slowdown that most of the GDP forecasts that I have seen.
As for the VIX, it is now well below the 25 level which would signal a decline in the wild volatility that has been with us for months. It got as low as 23.50 this morning and is currently hovering just above the 24 level.
Trading comment: The SPX has bounced off of its overhead 50-day average both yesterday and again this morning. The 50-day sits near SPX 1228. That is the first level we need to close above for this rally to continue. Hopefully we don't get any more earnings warnings like we got from Intel. If so, I still think there is a shot for another push higher into year-end. I have been premature with this call, but did correctly point out that after the SPX tested its overhead 200-day moving average there would likely be a pullback and some consolidation first.
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