The big news this morning was the latest round of lowered guidance, this time from some semi companies. Bellwether AMAT lowered its 2012 sales guidance and said EPS will come in at low end of range. AMD also lowered its Q2 guidance. And in the medical device arena, MAKO is getting absolutely killed after dramatically reducing its forecast for unit sales.
Overnight, the action in Asia was lower after import figures out of China came in at only 6.3%, half the rate that was expected. But European markets are higher this morning after EU finance ministers announced plans to expedite the 30 billion euro recapitalization of Spanish banks. That helped push Spanish bond yields lower to 6.74%, after they had been flirting with the 7.0% level.
The news hasn't helped the euro much, which is lower again vs. the dollar and near its June 2010 lows. Commodities are mixed with gold prices firm near $1590 but oil prices weaker around $85.00.
The 10-year yield is flat at 1.51%, nearing its June lows. As for the volatility index (VIX), it has found some recent support near 17 and bounced to 18.20 so far.
Trading comment: Given the news backdrop of companies lowering forward guidance, and more signs of slowing in China, I feel comfortable with our defensive posture. That said, I just heard a guy on CNBC remind us of the saying "never short a dull market". And the market does feel a bit dull lately. I think a key tell will be how the S&P 500 handles its next test of its 50-day average. If it breaks back below it, that would put the market it a more defensive position. We will have to await some earnings reports from some of the big boys before investors make decisions one way or the other.
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