The markets are lower in early trading. Yesterday the indexes recouped some of their losses into the close, but this morning the SPX is breaking below its 3-day support levels. I think this is mostly profit taking after a big run in the market as opposed to news driven selling.
We are getting into preannouncement time for any companies that don't think they are going to make their quarterly numbers this time around. GameStop (GME) is down -10% after reporting disappointing holiday sales. YUM is also down -4% after the company lowered its sales forecast for its China division.
Telecom stocks are weak this morning also. Rumors are that Verizon may purchase Vodafone's stake in Verizon Wireless.
Asian markets were mostly lower overnight. Japan's finance minister said the country would use its fx reserves to purchase European Stability Mechanism bonds in an effort to weaken the Yen.
European markets are mixed. Eurozone unemployment came in at 11.8%. And Eurozone consumer confidence was in line at -27.0, a low figure.
Commodities are mixed this morning as the dollar is rallying. Oil is a bit lower near $92.90, but gold is bucking the trend and trading higher to $1654.
The 10-year yield is easing back more to 1.87% following last week's spike higher. And the volatility index is up 3.5% again but still hovering at very low absolute levels of 14.25.
Trading comment: Investor sentiment remains a bit complacent at this juncture. I have been looking for some consolidation in stocks which should also work off the short-term overbought condition. While it is true that the number of stocks breaking out to new highs has been growing, be wary of stocks that disappointed last quarter and could be set to disappoint again.
KAM Advisors has long positions in YUM, VZ