Pockets of Opportunity: Street Sense

We've had a good sampling of earnings so far, and the confessionals continue this week. All in all, we've seen a decent showing. Some of the follow-up price action was due to a previous run-up (as was the case with IBM(IBM)). For the most part, the results and guidance have been positive. Sentiment still continues to be the driver of action.

Even with Friday's pullback the markets are significantly overbought in the interim. Now, that's not necessarily a bad thing, but you wouldn't want to get on board with new trades just yet.

Technically, there are some areas of strength that beg for a look on the next pullback. Financials may have run ahead and the giddiness was sold. That's OK, however, as there may be opportunity. The financials have been crushing estimates. At the beginning of this week, technology had been mostly mixed but was once again a pullback away from being overbought.

The VIX had been showing us a level not seen in over a year. It has been consistently pressing lower and went to less than 21 to close last week. If it stays under 25 that would bode well for the bulls and eventually get it pulled under 20 before too long. We generally worry about too much complacency, but until it turns the other way we have to focus on the trend.

Commodities and the Greenback

The coming few months could be big for commodities. Oh sure, gold has had a big run the last six weeks and is up nearly 15%. Silver has also been on a roll, but it hasn't gained as much as gold. Oil has been on the move lately, and I recently wrote that the $75 level was stiff resistance, but that once that broke we would see $90 very soon.