The market is rallying this morning on the heels of several better than expected economic and earnings reports.
Cisco (
CSCO) reported strong results last night, and also raised guidance going forward. The upbeat news was met with enthusiasm by investors, and is helping tech stocks lead the action so far today (particularly semis).
Retail sales also showed some positive signs, as high-end chains like
Saks and Nordstrom (
JWN) both posted larger than expected increases in same-store sales for October. It was the luxury market's first positive reading since May 2008, according to the
ICSC. The strongest showings still came from discounters like
TJX and ROSS, while the weakest areas were teen apparel companies such as Abercrombie (
ANF) American Eagle (
AEO), and Hot Topic (
HOTT).
There were also more solid economic reports, such as
Q3 productivity surging +9.5% (vs. 6.5% consensus) and
unit labor costs falling -5.2% (vs. -4.2% consensus). Both of these
datapoints are positive for the inflation outlook. Also, initial jobless claims fell to 512,000, down 20k from last week. The
Monster Employment Index also ticked a big higher, so hopefully these will translate into a better than expected monthly payrolls report which comes out tomorrow morning.
In overseas news, both the
ECB and
Bank of England held rates steady at 1.0% and 0.5%, respectively. The
BoE also expanded its bond purchase program by 25B pounds to 200B. Asian markets were mostly lower overnight.
The dollar is roughly flat currently, as are most commodity prices; the 10-year yield is also flat at 3.53%; and the
VIX is down another -6.1% to 26.02.
Trading comment: The market is getting its oversold bounce that I was expecting, and we still have a ways to go before it gets overbought again. That said, apropos to the charts I showed yesterday, several key indexes remain below their 50-day averages, so I expect to see some resistance if and when they reach those levels. A pullback after that would probably set up a better buying opportunity than today, but I am still make short-term trades in the interim.
long SSO, VXX
