The markets are flattish in early trading after big gains in Asian overnight but fading enthusiasm as European trading got underway.
Asian markets rose overnight after the Bank of Japan became the latest central bank to announce more stimulus. The BoJ increased its asset purchase program by 10 trillion Yen to 80 trillion. Japan and Hong Kong rose by more than 1% while China rose only 0.4%.
Europe’s markets are not higher this morning after an ex-ECB memeber commented that the bond purchasing program is not a silver bullet capable of fixing the underlying problems in the region. For its part, the Bank of England decided to keep its asset purchase program unchanged.
In economic news in the US, existing home sales for August hit an annualized rate of 4.82 million units, which is up from the prior months rate of 4.47 million units.
The dollar is slightly lower and commodities are mixed. Gold prices are a bit higher to $1773, but oil prices continue to take it on the chin and are now down to $92.30 from almost $100 at the start of the week.
The 10-year yield is pulling back a little more to 1.78%. And the VIX is back near its August lows down -3.3% to 13.70.
Trading comment: The stairstep market continues. The market has had a chance the last few days to pull back from last week’s gains, but it hasn’t given back much at all. The market has basically traded sideways for the week so far as it works off its overbought condition. It still feels like underinvested portfolio managers are looking to put money to work on any dips and this could last into quarter end. Bullish sentiment continues to rise and this is a bit of a red flag. But sentiment is a secondary indicator and it won’t likely kick in until we first see a break in the price action and some selloffs that have volume behind them.