A Quickie

Tonight's commentary will be a brief one, but below is a summary of the major markets and what I saw from them today.  Truth be told, today's action wasn't all that impressive, so there's not a lot to say.  Hopefully, I'll have some more in-depth comments for tomorrow, especially with all the economic data that's slated to come out.

Equities:  The bounce off the oversold conditions that resulted from last week's sell off continued today, along with thin trading volumes.  The S&P 500 looks to be stuck just below the 1,100 level (It failed for a second time during today's session) and appears to lacking the confidence to break on through.  Part of this lack of confidence resulted from the mixed earnings news that came out today.  Among the retailers, it seems that there are those who are growing sales robustly and those that are simply hurting.  Not a lot of folks in the middle.  Deere & Co., while out with positive earnings, failed to wow investors as management cited a challenging construction environment as well as potential negative effects from the crop disasters in Eastern Europe as headwinds for coming quarters.

Treasuries:  As yesterday's relief selling implied, plenty of money is continuing to find a home in the U.S. Treasury market.  Today was no exception as yields largely fell across the curve, with longer maturities seeing declines of 1 to 3 basis points.  I continue to believe that the fears of imminent deflation are over done and, as a result, this opens up the Treasury market to a swift sell off if/when these concerns are allayed.  While certainly worth owning as a hedge against deflation, I would suggest adding Treasuries to your portfolio on down days rather than simply chasing the market in here.  .here's just too many people on one side of the boat right now.

Gold:  Gold continues to impress me with its price action.  Slowly but surely, gold continues to creep higher.  For a market that is well known to be quite volatile, this deliberate move up has got me moving from the bear camp to the cautious bull camp.  To an extent, this move higher has been a reflection of the 'flight to quality' trade associated with heightened concerns over a slowing domestic economy and a weakening U.S. Dollar.  This certainly makes gold prices vulnerable to many of the same risks currently in place in the Treasury market, which is why I'm remaining cautious in the bullish outlook.  At this point, I would like to see gold trade slightly lower over the next week or two in order to improve the momentum indicators ahead of taking a stab at the highs around $1,265.  If it can do this, I suspect the upcoming seasonal buying will help propel the market to new highs.

Crude Oil:  Once again, crude oil came under pressure as today's inventory data showed yet another build in crude stocks.  Thankfully for the bulls, though, this selling remained fairly light and enabled the commodity to hold above its near term trend line.  This is twice now that prices have dipped below this trend line and failed to close below it.  This tells me that the bias still remains on the upside.  It also tells me, surprise surprise, that crude oil remains the asset of choice for those concerned about geopolitical issues.  To an extent, this implies that the underlying supply/demand dynamics don't matter.  This certainly makes the commodity that much more difficult to trade, but, for my part, having at least a small portion of your portfolio exposed to crude makes a lot of sense.  If nothing else, you can rest easier at night knowing that you've got a little protection against events that lie outside the financial markets.

Jobless claims and leading economic indicators are out tomorrow, so look for these data points to drive trading throughout the session.  There is some reason to believe that this week's jobless numbers will be a marked improvement from last week due to statistical issues with the previous report, so I wouldn't be surprised to see a decent reduction in the reported number.  That's what my gut tells me anyway.  Other than that, the markets will likely continue their search for direction and find little at the end of the day's quest.  Until tomorrow.....