Up, Up, and Away?

The S&P 500 has broken its patter of one up day, one down day.  That choppiness last for 13 days which is a very long streak.  But then the breakout higher came and we have been up for 4 days in a row.  That puts the market in short-term overbought territory, but it still hasn't paid to get bearish yet.

Retail stocks are leading the action this morning after same-store sales results were released.  BBBY reported solid earnings results, and ROST topped sales expectations and raised guidance for this quarter.

On the downside, tech stocks are lagging after industry data from IDC pointed to a 14% decline in first quarter PC shipments.  Microsoft is down nearly 5% on this news combined with a downgrade from Goldman Sachs.

Asian markets were mostly higher overnight, expect for China which was down slightly.  Bird flu concerns are still an issue in China, and the chinese press reported that small business optimism on the country's economic outlook is low.  Australia's unemployment rate ticked higher to 5.6%.  The Bank of Korea and Bank of Indonesia both held their key interest rates unchanged.

European markets are modestly higher.  Greek unemployment rose to 27.2% in January.  And Eurozone officials have indicated the Cyprus bailout will be approved Friday with the first tranche of aid likely to come in May.

The 10-year yield is slightly lower at 1.78%.  The VIX is up a bit to 12.55.  For most of the year the VIX has oscillated in the 12-15 range, so those are the levels to watch for excessive optimism or pessimism.

Trading comment: The market bounce continues.  Folks are likely emboldened by new all-time highs in the S&P 500, and bears likely had that level as a stop level to cover shorts.  In the short-term, the market likely needs to do some consolidating again.  But it has not paid one bit, and has actually cost you if you've been waiting for a 10% correction.  I'm sure at some point we will have one, but it is unclear from what level in the market it will commence.  If I had to go out on a limb, I would say we don't see one until summer if at all.  Growth stocks have started to act better lately, and that is a good sign.  A market that is led by defensive issues usually doesn't have the same staying power.

KAM Advisors has long positions in BBBY, ROST