The S&P 500 finished last week’s rally at the 1465 level. I was one of many who expected a mild pullback this week on profit taking, but the action has been more sideways than anything. Currently the SPX sits at 1464, and is poised to finish the week about flat.
Overnight Asian markets were mostly higher despite further comments about slowing growth in the region. The IMF lowered its 2012 GDP growth target for S. Korea from 3.25% to 3.00%. And Barclays wanted that China’s Q3 GDP could come in below expectations.
European markets are mostly higher this morning. A Financial Times article suggested Spain was close to revealing a rescue package that could come out next week. Germany’s finance minister projected slower growth in the back half of the year. Last, Greece is said to be considering raising the retirement age for the country to 67.
In corporate news, Oracle (ORCL) shares are slightly higher after the company missed revenue expectations but matched earnings. Michael Kors (KORS) is more than 5% higher after raising full year earnings guidance. This flies in the face of other high end retailers who have lowered estimates recently, which says that either KORS is taking share of just executing extremely well.
The dollar index is lower today which is helping commodities. Oil prices are higher to $93 after a few really weak days. Gold prices are also higher near $1774.
The 10-year yield is steady at 1.77%. And the VIX is also flat at the 14.0 level where it has been sitting basically all week. It did have a couple of intraday bounces higher from these levels, but by the close usually settled back in at these low levels.
Trading comment: Markets can work off overbought conditions in a variety of ways. Sometimes they have big correction, sometimes mild pullbacks, and sometimes they merely trade in a sideways fashion while resting. The latter appears to be what has transpired this week in the markets. From a technical standpoint, this is usually a bullish occurrence. A market that sits near its highs and refuses to give up any ground after reaching overbought levels is often a strong market. I would not be surprised to see this market make another push higher as we near quarter end. We have also been talking about underinvested managers needing a pullback in the market to put more money to work, but Mr. Market does not seem to be in a giving mood and is causing them to play catch up and chase stocks. Can you say performance anxiety?
KAM Advisors has long positions in KORS