Are Stocks Poised For New Highs?

The markets are slightly higher in early trading.  The S&P 500 has basically spent the last week oscillating around this 1400 level with volume running very low.  Could the stock market be building its internal energy for a shot at new highs?  Wouldn't be surprising. 

Overnight markets in Asia were lower.  China fell -1.1%, closing near a 2-week low, as investors are still hoping for a reserve ratio cut from the PBOC, with rumors swirling that this could occur near the end of the month.

European markets are also lower, despite some positive news on the UK job market with their unemployment rate falling to 8.0%.

In economic news in the U.S., the Housing Market Index rose to 37 which was above expectations and higher that last month.  Industrial production for July increase 0.6%, which was in-line with consensus.

In earnings news, a few stocks that are higher after reporting profits including ANF, BOBE, JDSU, and TGT.  A couple of stocks on the disappointing side are DE and SPLS.

The dollar is higher today, and commodities have been mixed.  After opening lower, oil prices have climbed into positive territory to $93.70.  Gold prices are slightly higher near $1606.  But copper prices are lower on the day.

The 10-year yield is getting another boost, rising to a 3-month high at 1.78%.  As for the VIX, it continues to trade at very low levels at 14.65.

Trading comment: Volume levels are running light, and the action in the markets feels subdued.  But the price action remains constructive.  After reaching overbought levels, rather than embark on a pullback, the major indexes have merely consolidated their recent gains by trading in a tight, sideways fashion.  I have to view this as positive action, and think that at some point the market will make a push higher to new highs for the year.  There is still a lot of problematic datapoints coming from the macro picture with China slowing, Europe still a mess, the ECB yet to act, the fiscal cliff still lingering, insider selling, etc.  But investors don't seem overly concerned with those issues at the moment.  Just remember that any of them could resurface at a moment's notice.