Midday Look

Got a late start this morning with one kid home sick and my being on drop off duty with the other one to school.  Anyway, the markets are still under some pressure in the first half of today's trading session.

AAPL continues to weigh on the market as it breaks below the $500 level.  This has some worried about what they might report in their upcoming quarter, but I would argue that the lower stock price removes some of the worry and makes it more likely that the stock rallies on solid earnings. 

Two other names that are lower this morning after reporting earnings are SAP and FRX.

In economic news, December retail sales rose by 0.5%, above the 0.2% consensus.  And the Empire Manuf. Index for January came in at -7.8, barely above last month's reading of -8.1.

Asian markets were mixed overnight, with China gaining 0.6% to six-month highs.

Europe is mostly lower today after disappointing GDP figures in Germany, where Q4 GDP contracted -0.5%.

The dollar is higher today, but commodities are mixed.  Oil prices are lower near $93.89 while gold prices are higher again to $1683.  Silver prices are higher but copper is lower, so the reactions to the dollar rising are mixed today.

The 10-year yield is lower to 1.82%.  And the VIX is just 1% higher to 13.67, remaining at very low absolute levels.

Trading comment: The market is continuing to consolidate its recent gains in a benign fashion.  Selling pressure has been pretty light on down days.  Last year we talked about the stairstep action in the market, and so far this year that looks like what we are seeing again.  Bullish sentiment is growing, and that is a yellow flag.  If I had to guess I would look for another push higher in the market which takes investor sentiment to extreme bullish levels before a correction sets in.  That's often how it plays out, and as usual timing is everything.

KAM Advisors has long positions in AAPL