Asian markets rallied overnight after speculation is increasing that further stimulus will come out of China to deal with its slowing economy. Europe's markets are mixed today as fears about Greece, etc. are off the front burner-- at least briefly. I expect the headlines to resume shortly. There are headlines out right now that the EU is planning on coming up with a new stability plan in June.
In economic news, the Consumer Confidence index came in below expectations in May at 64.9 from 68.7 last month. This differs from the Univ. of Mich. survey last week which was at a 4-year high.
The dollar is lower vs. the euro, which is helping commodities. Oil prices are higher near $92.10. Gold prices are also higher to $1576, as are silver and copper prices.
The 10-year yield is still languishing at 1.73%, not far from its recent lows. And the VIX is only down 1% today to 21.50. If folks were buying into this rally, I would expect the VIX to be down more than it is. That likely means folks are still skeptical of this market's ability to hold these gains.
Trading comment: Last week I said I still felt that with the market oversold and bearish sentiment at high levels that the market should continue to move higher. I thought the rally could carry the S&P 500 into the 1340-1360 range. Today the SPX has reached 1335, which is pretty close to that lower band. As we approach those levels, I want to look to lighten up on our equity exposure and add back to some ETF hedges. I don't want to get too bearish, as I suppose its possible that the EU could come up with some good can-kicking ideas, and Greece could elect a govt. that sticks to the austerity plans. But I don't think we've seen the last of the volatility and the summer swoon-type declines like we saw in each of the last 2 years.
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