Consumers Upbeat Despite Negative Headlines

The market is slightly lower in early trading, despite a surprisingly positive report on consumer sentiment.  The final reading from the Univ. of Mich. for May consumer sentiment improved to 79.3, which marks the highest level in more than four years.  I think that is pretty surprising given the constant negative headlines about Greece, the fiscal cliff, etc.  Or it may be that as a portfolio manager those headlines are front and center for me everyday, but for the general public they are not considered front page news.

Despite some lackluster action the last few days, the S&P 500 is up about 2% for the week if it were to close at current levels.  Among the sector ETFs, defensive utilities are again leading the early action, but surprisingly financials are getting a bounce this morning also.

The euro is bouncing around the flat line today, after having a very bad week.  This has helped the dollar rally for most of the week, and commodities faced a nearly 3% weekly loss.  This morning, oil prices are slightly higher near $90.85 and gold prices are also bouncing a bit to $1565. 

Europe's markets are mixed as eurozone leaders continue to call for the creation of a euro bond to help provide funds for dealing with the debt issues.  But Germany remains opposed to the measure since many believe they would be the ones paying for it.

The 10-year yield remains at low levels overall near 1.75%.  As for the VIX, it closed near its lows yesterday and is up slightly this morning to 21.65.

Trading comment: We haven't seen the follow through day bulls were looking for, but the window is still open next week for it to come.  It will probably take some positive developments out of Europe to light a fire under the market, but the conditions are in place for it since bearish sentiment remains high among investors and the put/call ratio is coming off a long streak of very high readings.