Stocks have given up their early gains as traders take profits on mixed economic data out today. Improving factory orders were overshadowed by a lousy pending home sales report for November. A bounce in the dollar is taking a bite out of the commodity strength at least here in the U.S. Crude oil futures are up about 10 cents near $81.62 a barrel. Gold prices are up about $2 near $1,120 an ounce.

Asian markets were positive. Japan's 2010 rally continues with another 15-month high and a +0.25% gain. The Hong Kong Hang Seng was the best performer with a 2% gain and a one-month high. Volume in Hong Kong is starting to return. A bounce in banks and financials helped the region rally. The Chinese Shanghai index gained +0.45%.

European markets were mixed. Drug stocks faltered on news that France was cancelling over half of the flu vaccines the country had ordered to fight the H1N1 virus. Meanwhile Germany said its unemployment fell for the sixth month in a row. Economists were expecting a loss of 5,000 jobs but the Federal Labor Agency said the seasonally adjusted December number was only 3,000 lost jobs. German unemployment was unchanged at 8.1%. Overall the French CAC-40 lost 0.03%. The German DAX fell 0.27%. The English FTSE closed with a 0.4% gain but the market was heading lower into the closing bell.

The economic data flow in the U.S. continues. The Commerce Department said factory orders rose sharply with a 1.1% gain compared to analysts' estimates for a +0.5% gain. This positive news was overshadowed by a terrible report on housing. The National Association of Realtors (NAR) announced that their index of pending home sales fell 16% to 96 in November. This decline ends a nine-month rally and pushes the index to its lowest reading since June. Investors shouldn't be surprised. There was a mad rush of home buying in September and October to get closed before the tax credit expired. When the tax credit was extended to spring there was no longer any urgency for buyers to close on a deal. Home sales are likely to be sluggish over the winter months.

Google (GOOG) was making headlines today with the launch of its Nexus One mobile phone handset. What makes this one different from the Motorola Android is that the Nexus is a piece of hardware completely designed by Google engineers. Early reviews for the Nexus are ho-hum. Some analyst feel that GOOG is getting away from its core businesses and shouldn't be designing or producing hardware. Others argue that mobile search is growing sharply now that 1 out of 5 mobile phones are "smart" phones. This is another way for GOOG to help grab more market share.

Elsewhere in the mobile phone industry Apple Inc. (AAPL) announced it was buying mobile advertising firm Quattro Wireless. AAPL plans on staying atop the smart phone mountain and knows that the smart phone market and advertising revenues are growing. No details of the deal were released.

Consumer electronics continue to evolve. A few months ago Sony announced it would start producing 3D televisions. Now Disney (DIS) has announced that its ESPN channel will start broadcasting certain events in 3D starting with the FIFA world cup in June. The question is do we still need to wear the 3D glasses at home to enjoy this 3D broadcast?

Many of the major market averages hit new highs this morning but stocks continue to retreat lower. The best performers are the airlines (XAL index +4.6%), the oil services (OSX +1.7%), casino stocks (+3.8%), railroads (+1.0%), cyclicals (+1.0%), and the BIX banking index is up 1.3%.

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

A quick scan of the OptionInvestor.com play list reveals that FUQI is indeed in rally mode but the high today was $20.48 and our trigger to buy calls is at $20.51. IBM is retreating back toward short-term support near $130. JPM is extending its gains with another 1.3% rally. PCP is also extending its gains with a 1.3% rally. Ouch! Stifel Financial (SF) is off 3.7% and I can't find any news to explain the decline.