In the manufacturing sector we have seen a string of improving activity readings in recent months. Today's ISM is the first datapoint to show some slowing. The ISM Manuf. index for February fell to 52.4 from 54.1 the prior month. Yesterday's Chicago PMI reading was solid, so we will have to wait and see if this ISM is the start of a trend or just a one-off weaker reading.
Same-store sales reports for retailers came out this morning and are generally positive. This likely coincides with the improving consumer confidence readings we have seen recently. Hopefully this continues and starts to boost the economy at which point we could get a mini virtuous cycle going. Further improvements in the housing sector would also help in that regard.
Gold and silver prices are bouncing back a little this morning from yesterday's sharp selloff. Some people pointed to Chairman Bernanke's speech yesterday and the lack of a mention for further QE3 in his comments. I think that may have been a very small part of it, but I don't think too many traders had their hopes up on more imminent quantitative easing.
The volume in the GLD and SLV was extremely high. And the fact that it came on the last day of the month to me looks like it could have been lots of hedgies scrambling to lock in profits on the last day of the month and all rushing to sell at the same time as the price action continued to deteriorate.
Asian markets were lower overnight, but Europe is higher this morning.
Materials stocks are leading the early action, while defensive consumer staples are lagging. This is pretty much the mirror opposite of yesterday's action.
Oil prices are up a bit to $107.75, and gold prices are higher near $1722. The 10-year yield is getting a boost above the 2.00% level to 2.04% currently. And the VIX is down -4% early to 17.75. While the VIX is still in an overall downtrend, it looks like it could be starting to form a bottoming base.
Trading comment: The parabolic move in Apple (AAPL) looks unsustainable to me. It is still our largest position overall, so I'm not complaining, but the history of this type of action in stocks always seems to slow. It would not be surprising at all to see the stock remain firm into next week's Apple event when they announce the iPad3 and then for the stock to selloff. I likely won't do much trimming ahead of that event as I still think AAPL shares are cheap relative to earnings and that despite whatever correction could ensue the stock should still be higher at year-end. I don't want to sound complacent, I just think that the stock has been undervalued for a long-time and its finally starting to get upward revisions to its valuation by the market.
KAM Advisors has long positions in AAPL, GLD, SLV
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