Dip Buyers Surface In Early Trading

The market is higher in early trading, as buyers have stepped up to buy the latest dip that was yesterday's selloff. There isn't a whole lot in the way of positive news, but that hasn't gotten in the way of this morning's agenda to put some money to work.

The FOMC meets today and while there is some rumors of the Fed announcing further QE initiatives, I think the most likely scenario is to hear more of the same and that the Fed remains accomodative.

In corporate news, Best Buy (BBY) reported earnings that missed consensus estimates and its stocks is getting hit.

In economic news, retail sales were up 0.2% in November, which is less than expected. The combination of this report and poor BBY results is weighing on the retail sector this morning.

Asian markets were lower overnight, while Europe is getting a bounce this morning on little new news. There was some encouraging data out of Germany, but the euro is lower on the day so far.

Commodities are mixed. Gold prices are up a bit near $1670. Oil prices have been up the most, above $100 earlier, as news leaked out that Iran was looking to shut the Straight of Hormuz in some sort of military operation. But as news has come out that it remains open, oil has eased back from its highs.

The 10-year yield is getting a nice bounce near 2.05%. I think it would be a big positive for sentiment towards the economy if the 10-year yield could lift a little more. It did get up to 2.40% in October, but that rally was short-lived.

Probably the biggest suprise today was when I came in and saw the volatility index (VIX) down 9%. The VIX got as low as 23.27, although it has bounced from there. I actually bought a little VXX for a daytrade as these morning drops in the VIX never seem to stick for the entire session. But it is still a big positive if it can close below the 25 level.

Trading comment: Stocks are already off of the earlier highs as I finish this blog post. I expect trading to be relatively quiet until after the FOMC announcement when the fireworks usually begin. I don't expect any big surprises, but the market could still rally afterwards. Yesterday the SPX got down close to its 50-day support before bouncing. So the index has been squeezed between its overhead 200-day and its 50-day below. While the credit indicators are still flashing caution, I still believe we will see another push higher before year-end.

long SCO, VXX