Wednesday, July 20, 2011

Flight-to-Safety Trade Coming Off

The market is roughly flat this morning, after a nice rally yesterday on strong volume. The flight-to-safety trade that we have seen over the last week or so seems to be coming off today.

All three of the flight-to-safety components are lower so far. Treasuries are lower, pushing yields up slightly to 2.93%. Gold prices are lower, nearing $1589. And the dollar is lower, helping to push most commodities higher. Oil prices are back to $98.33.

There was another batch of strong earnings reports last night. Apple (AAPL) was the poster child. The company trounced the estimates, and more than doubled its profits. It was an astounding quarter for a company the size of AAPL. I covered the conference call for TheStreet.com, and will post my write-up on the blog later (check back).

Other stocks that are higher after reporting earnings include ISRG and VMW, while RVBD missed revenue estimates and the stock is getting clobbered for -20%.

Asian markets were higher overnight on the improved tone in the U.S. markets and hopeful news on the debt ceiling. And markets in Europe were higher this morning after a relatively successful bond offering by Portugal.

Trading comment: The market is acting better in the big picture. The S&P 500 and Nasdaq are both trading above their 50-day averages. Growth stocks are acting better, and leading stocks continue to break out to new highs. But the market should be acting even better on the lessening of euro angst today. Plus, we're not fully out of the woods in terms of the debt ceiling issue. Another setback in the debates could whack the market again. That said, I do want to pick and add to stocks that are reporting solid earnings, I just don't want to get overly aggressive yet.

long AAPL, ISRG

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