Stocks Bounce Despite Spanish Strains

The markets are higher in early trading.  Yesterday's action was clearly disappointing as the early gains quickly dissipated and the market closed near its lows.  I thought we would see more weakness this morning, but the markets so far have been bouncing despite ongoing strains in Spain.

Spanish yields continue to rise, and Fitch made further ratings cuts to some Spanish banks.  Despite these issues, Europe's stock markets are higher today.  Asian markets were lower overnight after the selloff in the US.

TXN narrowed its earnings outlook last night, but it's stock is up a little.  AGU is also higher on revised earnings guidance.  KORS topped estimates last night and raised guidance and its stock is up 6%.  On the downside, FDS lowered guidance and its stock has gapped lower.

Other than that there is not a whole lot of news or economic reports moving the markets.  Things are still very headline driven, mostly out of Europe. 

The 10-year yield is getting a bounce to 1.63%.  The dollar is down a bit, which is helping lift gold prices near $1610 and oil prices close to $83.50.  Silver and copper prices are higher as well. 

As for the VIX, it is currently down -2.5% as the market bounces, just below the 23 level.

Trading comment: Market action remains choppy.  Yesterday's action was pretty bearish in that there was a real lack of buyers.  On the NYSE, downside volume totalled 91%.  That said, today is the third day that the SPX has held this 1307 level and it is currently trying to bounce.  So maybe the market has another push higher up its sleeve.  That said, I am still inclined to remain defensive as conditions in Europe remain tentative and economic growth appears to be slowing (recent ECRI drops).

KAM Advisors has long positions in KORS