Will Euro Bonds Float The Market?

The market is slightly higher in early trading after a nice reversal yesterday off the lows.  Sentiment is slightly improved in Europe as leaders meet to discuss more plans for dealing with the debt crisis and the possibility of a Greek exit.  The issue of eurobonds has been floated around, and it seems like most members are in favor of the idea with Germany being the lone standout and strongly opposed to the idea.

There has also been some chatter that the Fed is helping provide liquidity by considering a cut to swap line fees as part of a large coordinated bank action.  History shows us that any time we get coordinated global central bank action the market usually rallies in the short-term.  But it doesn't always mark the low.

The improved tone in Europe is helping the euro bounce a tiny bit, which is also helping commodities lift.  Oil prices have bounced to $91.41, gold prices are higher near $1575, and silver and copper prices are higher also.

In corporate news, HPQ was able to top estimates and its stock is higher.  COST is also higher after topping estimates.  NTAP lowered guidance and the stock is taking it on the chin.  Other stocks lower after reporting include TIF, HNZ, SIG.

In economic news, durable goods for April were essentially in-line at +0.2%.  And last month's figures were revised higher. Jobless claims were also in-line, while continuing claims declined to 3.26 million from 3.29 million.

So far among the economic sectors etfs, energy stocks are lagging while defensive utilities are leading (so are consumer staples).

The 10-year yield is getting a bounce to 1.77% after successfully holding the 1.70% level yesterday for the 3rd time in the last week.  Hopefully this will provide a floor.  As for the VIX, it is right between that 20-25 level I have been talking about at 22.20 right now.  Yesterday it got close to the 25 level before a big downside reversal into the close.

Trading comment: If the central banks are coordinating something, that could be the catalyst that provides a spark to this weak oversold rally we've been seeing.  The lows at SPX 1300 held yesterday but we need to take out Tuesday's highs at 1328 for the uptrend to pick up steam.  We are still in the window for IBD-style folks to be looking for a follow through confirmation rally to Monday's rally.  I think the SPX can get up into that 1340-1360 range where it will run into stiffer resistance.  We would be looking to lighten up on equity exposure and add back to some etf hedges if and when we reach said levels.

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Markets Worry About A Potential "Grexit"

The markets were acting fairly well yesterday until news hit the wires that Greece's PM was making comments about Greece leaving the euro.  This news shouldn't come as a big surprise, as the possibility has been bandied about for awhile now.  But I guess the fact that they are now entertaining the idea in public brings it into reality.

There have also been rumors going around this morning that eurozone officials have been telling members to make contingency plans for a potential Greek exit (which some are now calling  a "Grexit").  As a result European stock markets are down a fair amount today, and the euro is very weak as well.  The euro is nearing the $1.25 level vs. the dollar, which is just about a 2-year low for the currency.

The dollar is up vs. the euro, which is weighing on commodities as well.  Oil prices are down to $90.35 (when are gas prices at the pump coming down?), and gold has fallen back to $1536.  Copper and silver prices are also weak reflecting concerns about global economic growth.

Asian markets were also down overnight, with Japan down -2.0% following the downgrade of the country's debt rating by Fitch. 

In earnings news, a few retailers reported earnings and garnered positive actions.  PETM is the big winner as the pet retailer topped estimates.  AEO and GES are also trading higher after reporting earnings.  Today's big loser is DELL, which is down -16% after missing estimates and lowering guidance. 

The 10-year yield is also down a lot today, back near its recent lows at 1.71%.  And the VIX, which got down to the 20 level yesterday before snapping back is up another 8% today back to 24.23 in a hurry.  For reference, last week's high in the VIX was 25.14.

Trading comment: The market ultimately repeated its recent pattern yesterday of opening strong but closing weak.  That's not what bulls want to see.  Today the markets opened weak, which is better than opening higher but its the close that counts.  So hopefully the market can cut some of its losses into the close.  On a positive note, I am seeing lots of growth stocks bucking the early weakness and trading in the green today.  AAPL and GOOG are also both higher as of now.  The market is still coming off of grossly oversold levels, and sentiment is also coming off of very bearish levels.  So while the Grexit news is making for scary headlines, I think any positive developments out of the EU could lead to further rallies.

KAM  Advisors has long positions in AAPL, GOOG

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Stocks Look To Add To Big One-Day Rally

The market is higher in early trading after posting its best one-day gains in two months yesterday.  Volume was nothing to write home about yesterday, but the price action was very strong and now we need to see if stocks can build on those gains.

A handful of retail companies have reported earnings this morning and the reactions in the underlying stocks is mostly positive.  Some of the stocks rising on earnings include: RL, BBY, DSW, WSM, URBN.  The big retail disappointment today is EXPR, which missed estimates and reduced guidance which is killing the stock.

In economic news, existing home sales were in-line for April at 4.62 million rate.  The homebuilders etf (XHB) is higher on the news.  But the leading sector so far this morning is financials (XLF) with JPMorgan bouncing back nearly 6% currently. 

Asian markets were higher overnight, closing before analysts at Fitch lowered Japan's debt rating.  Europe is also higher this morning, but the euro is not benefiting from the improved tone.  Bond yields in Europe are lower as well.

The dollar is higher vs. the euro, weighing on commodities.  Oil prices are weaker at $92.25 and gold prices are also a little lower near $1586.

The 10-year yield is getting a little bounce to 1.80%.  And the VIX is down another -7.5% today to 20.35.  It has now taken out last week's lows. My guess is it will find some support near the 20 level and bounce.

Trading comment: The price action so far this morning is impressive, especially with all of the naysayers saying yesterday's rally was just a one-day wonder.  IBD growth-style investors will be looking for a confirmation day to follow yesterday's rally.  This would come in the form of a 1% - 1.5% up day accompanied by rising volume in the next several days.  But the 50-day average on the S&P 500 has rolled over, and as such should offer stiffer resistance if and when the index gets up there to test it.  The SPX would have to rally to around 1375 to meet up with the downsloping key average.  Financials are up more than 2% as I finish this post, which is encouraging.

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Monday Morning Musings

The market is getting a nice bounce in early trading.  Last week, this was a bad sign as every up open in the market sold off by the end of the day and the market would close weak.  That could still happen today, but the market is heavily oversold now and feels like there is a bit more bid to stocks than last week.  And stocks have been down for 11 of the last 13 trading days.

Industrials and materials stocks are leading the early action, as those groups were the hardest hit over the last few weeks.  Defensive consumer staples and utilities are lagging.  Financials are also faring well, but JPMorgan is not participating today after it said it will suspend its stock buyback but maintain its dividend in the wake of its large trading losses revealed last week.

There isn't a lot of news to attribute the strength to.  Asian markets were mixed overnight with little action.  But Europe is up slightly today and the message out of the G8 meeting over the weekend was that global leaders want to keep the EU intact and would like to keep Greece in the eurozone.  Somehow I still feel before all is said and done that Greece will decide it is better for them to exit the euro.

Despite the G8 news, the euro is basically flat on the day, but it is up from its lows earlier this morning.  Commodities are getting a bounce with oil prices up near $92.25 and gold prices trying to get back to $1600 (currently $1595).  I sure haven't notices a drop in prices at the pump here in LA.  Has anyone else?

In corporate news, CBE will be acquired by ETN for a nice premium.  And LOW reported earnings and the stock is getting hit due to lackluster guidance. 

The 10-year yield is getting a bounce from last week's ultra low levels, currently 1.74%.  And the fear premium is coming out of the options market in the form of a 10% drop in the VIX so far.  The VIX has broken below Friday's lows (23.07) and is close to taking out Thursday's lows at 21.87.  The VIX is trading near 22.50 as of this post.

Trading comment: I was early last week looking for an oversold bounce.  But bounces do come at some point, and it looks like now we have more ingredients lined up to make it happen this week.  The fear premium is coming out of the VIX, bearish sentiment spiked last week, and the market is as oversold by several measures as it has been since the bottom last October.  I still expect continued volatility this summer, so we would be looking to use any upcoming rallies to trim/sell lagging stocks and move to a more defensive allocation for the intermediate-term.

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Social Marketing: Beyond the Hype or Behind the Curve?

What is the reality of Social Marketing adoption? Does usage match up to the hype and high expectations? Or is this already an over-blown marketing fad, even in these early days?

IDC is beginning to see excellent examples of use, where Social Marketing is moving beyond  experimentation and is beginning to put down roots as a "value-adding" contributor within the marketing-mix. Our latest research from shows that 84% of IT buyers are accessing social media to keep up with trends and stay connected.

However, of that same 84%, only 19% believe that social media has influenced how they interact with vendors and make purchase decisions. It would seem that tech vendors and tech buyers are inhabiting many of the same Social media spaces, but Social Marketing as a more intentional effort to influence buyers still needs work. Tech marketers are learning that they must give before they expect to receive, and focus on creating social media interactions that are highly relevant and provide value to buyers.

IDC is closely watching levels of investment and attention to the deployment of Social Marketing. How much is actually being spent in this area? What is the marketing-mix allocation of scarce monies and human resources to work on these initiatives? IDC starts by looking at investment and activity in Social Marketing. When one examines the actual allocations. the results are surprising. Investment in Social Marketing tools and programs is just 1.3% of the discretionary budget for a large IT vendor. As for the human resource: dedicated Social marketing talent is just .7% of total staff – or in other words – a part of one person's time.

The infrastructure and tools to support Social Marketing must come in to place. Our research also shows that Social Marketing tools are at the top of the CMO’s shopping list for 2012. Only 34% of marketers surveyed currently agree that they have access to the right information at the right time to support decision making, analysis, planning, or forecasting.


We are still in the early days of this. I cast my vote on the side of optimism, and believe that Social Marketing execution will, in-time, be a core element of the B2B marketers tool kit.

In the mean-time, assess where are you on your progression towards delivering value, and earning the rewards of Social Marketing. Here are three tips for Social Marketers:


1) Don't rush the listening process: Our parents taught us to "listen before you speak" and here is a great place to remember their words. IDC is seeing good usage of Social Marketing for the key activity of "Listening and Monitoring". In fact, "just listening" to the conversations about your company–without even "saying" anything–is an excellent way to step into this new media. Many companies are rushing this step, which has limited their ability to meaningfully engage with their targets. Data from IDC's 2012 Buyer Experience Study shows that buyers are most commonly found in communities and blogs, making them an excellent source of relevant conversations.


2) It's not only about presence, it's about influence. Always prioritize the value that you can bring to your audience. Help educate them. Help connect them with their peers. These are attributes that they dearly seek, versus being "sold to" by their tech vendors.


3) Invest and evolve: Continue to invest in Social Marketing and increase proficiency. The relatively low level of dollar and staff outlay will grow quickly in the coming years. At the same time, there should be a relatively sizable gain in cost per impact vs. traditional media. Social Marketing is capable of providing high impact at a relatively low cost. Invest and increase proficiency to achieve higher levels of impact.

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Still Looking For Upside

The market is getting a bounce in early trading, but it still needs to pick up some steam as the day wears on to have a real impact.  We did get some positive economic reports today which seem to be helping. 

Both Asian and European markets were both down overnight, but our market seems to be shrugging it off.  The euro is getting a small bounce today, which isn't surprising given the 10-day tear the dollar has been on.  Look at the chart of UUP to see what I'm talking about.

The relative weakness in the dollar today isn't helping commodities much.  Gold prices are still struggling to hang on to the $1550 level, and oil prices have dipped below $94 on demand concerns due to slowing economic growth.

On the earnings front, a handful of retail stocks have reported earnings with mixed reactions.  Target (TGT) beat estimates and its stock is higher, but ANF, JCP, and SPLS are all lower after reporting.

In economic news, industrial production for April grew by 1.1%, which is higher than expected.  And capacity utilization was slightly above expectations at 79.2%.  Also, housing starts increased in April to a rate of 717,000 units from 699,000 the prior month.

Later today we get the minutes from the last FOMC meeting.  I don't expect any surprises here.  Probably just more of the same debate over how much additional stimulus is needed vs. when the Fed should start removing said stimulus. 

The 10-year yield is up a touch to 1.80%.  And the VIX is down -3% to 21.25.

Trading comment: Yesterday's late action was disappointing.  That's not what you want to see.  Markets that open strong and close weak are the definition of a market that is not ready to rally.  Let's see if today can change that pattern.  We opened higher today and need to build on the gains into the close.  The S&P 500 needs to get above yesterday's high of 1445 just to change the near-term trend.  And above 1350 gives the market a shot at its overhead 50-day near 1384.  As for the Nasdaq, the 2900 level has held very well.  One stock that stands out today is Google (GOOG) which is retaking its 50-day average today on solid volume.  GOOG is regaining some respect after the Facebook IPO documents highlight the potential for mobile advertising and the fact that FB will come public at a price-to-sales multiple far higher than GOOG.

KAM Advisors has long positions in GOOG

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You Call That A Bounce?

The market is only slightly higher in early trading despite the market back in oversold territory and down the last 7 of 9 days.  The futures were pointing to a stronger open early this morning, but the enthusiasm quickly faded.

The latest Empire State Manuf. Index improved to 17.1 in May from 6.6 in April.  Also, the NAHB Housing Index came in better than expected at 29 vs. 25 the previous month.

Futures were pointing to a strong open, but when the news hit that no agreement has been reached in Greece on an elected government the futures lost some ground.

The news also hit the euro vs. the dollar.  Commodities are slightly weaker, with oil prices at $94.70 and gold prices a bit lower to $1554.

The 10-year yield is still at low levels near 1.77%.  And the VIX is only 2% lower to 21.40, after reaching multi-month highs yesterday.

In earnings news, Groupon (GRPN) is soaring on a combination of short-covering, which began yesterday, and a solid earnings report that has caused additional short-covering today.  Home Depot (HD) reported in-line earnings but its stock is lower in reaction.

Trading comment: So far this is a very weak bounce.  I think bulls really would like to see the market build into the close and for volume to pick up as well.  The lack of buying enthusiasm so far is notable.  The SPX is hovering right near the 1340 level that marked the March lows.  Bearish sentiment has been on the rise lately, which should be supportive of a near-term bounce that I have been looking for.  It's hard to tell how much of this is concern from Greece (and Spain), but I'm sure that is certainly a factor.  Sovereign bond yields and also CDS prices have all been on the rise of late.  Credit default swaps are at multi-week highs, but still below levels seen earlier this year.  Maybe some good news out of Greece regarding its political strife would serve as a catalyst for a rally.

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