Strong consumer confidence and new home sales helped to move markets higher in the first half of yesterday’s market session. However, the same old worries over Iraq triggered profit taking in the afternoon. It felt a lot worse than it actually was. In the morning I sold a small laggard position to raise some cash. Otherwise, it was a rather unexciting session.
The fact that the CBOE Volatility Index rose about 10% got some attention, but I consider that to be statistically insignificant given the low nominal levels of that index.
Energy Stocks Get Hit; Biotechs and Utilities Rise
Energy stocks really took it on the chin, especially the exploration companies. Again, this is all in reaction to rising crude oil prices and the conflict in Iraq. On days like yesterday, I like to look at what was trading higher in a down tape. Two sectors stood out there – biotech/pharmaceuticals and utilities all caught bids.
Today there will be a few earnings calls to keep us stimulated, such as General Mills (GIS), Monsanto (MON) and Bed, Bath & Beyond (BBY). Durable goods orders for May and mortgage applications for last week will be released in the morning. I do not see any micro data – economic or corporate – that can move the markets today. Rather, goings on in Iraq and Russian will likely dictate market direction.
IPO Calendar Starts Early Summer Vacation
There has been a dearth of initial public offerings this month. Some pundits equate markets tops with a flushing out of bad IPOs. Clearly that has not occurred. I expect that the calendar gets a little more exciting come September.
The game plan remains the same – lighten up a little bit heading into the first week of July and figure out ways to best enjoy your summer.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GIS — although positions can change at any time.
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