The markets started out in the red, but quickly reversed the early losses and are currently up across the board. The consumer sentiment survey for May from the Univ. of Michigan helped as it showed an improvement to 77.8 from a reading of 76.4 last month.
While sentiment improved in the U.S., it continues to deteriorate in Europe. Markets are lower across the pond, and bond yields in Spain have topped the 6% level that traders view as a line in the sand above which markets are considered to be getting jittery. Spain already had to nationalize one bank earlier this week.
Asian markets were also lower overnight. The dollar is up a tad today, and most commodities are lower. Oil prices are down near $96.75 and gold prices are weaker at $1588.
The 10-year yield has drifted back to 1.85% following yesterday's brief spike higher. And the VIX is down to 18.74 after failing to retake the 20 level. But this was just the first stab at the 20 level, and a lot of traders expect volatility to pick up into the summer which would take the VIX higher.
Trading comment: Yesterday I said the market looked like sellers were getting tired and it could bounce. More evidence of that this morning as the S&P 500 again poked below the 1350 level but found support. We have now tested that 1350 level successfully 4 days in a row. So although volume will likely be light today, I think the early action is constructive and supportive of my view that a short-term bounce is in the cards. If the SPX is unable to retake its 50-day average, I would look to lighten up on stock exposure and get more defensive. But I think a lift will allow us to do that at better prices.
KAM Advisors has long positions in JPM, SH
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