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The DOW gave up all of its gains for the year today and all of the indexes broke lower. All the bad news finally caught up to the market; Argentina, Russia, Mideast, higher rates and ISM number. We have been making new highs on less volume and with fewer stocks making those new highs.
On a risk off day like today, you would normally see the bond market rally, meaning bond prices up and yield down (flight to quality). Yet the opposite happened as bond prices sold off and yields rose, which tells me that out of all the negative macro events out there INTEREST RATES going higher is really what market participants are most worried about.
As a result, momentum stocks were crushed like a grape. IBB (biotechs) was down 2.5% or 6 bucks.
The financials had a brutal day as the XLF broke its 50 day moving average hard with big volume. It closed about 8 cents above its 100 day moving average.
There are some great stocks out there that are getting pushed down to attractive accumulation levels, but it doesn’t pay to rush. One day means nothing, and the bears could unload for one more day.
Don’t forget the jobs number is tomorrow and this will be a big one. Too hot a number will undoubtedly have the street feel that higher rates will come sooner than later. A bad number, and they will doubt the strength of the economy. Hopefully, it will just land where its suppressed to.
Don’t know what it is, but I think this gets over with soon. These corrections have been swift and furious and then we resume higher.
In any event, we will all be in a position to buy some cheap merchandise soon. I’m scanning, searching and watching. Stay tuned.
Have a great night, hope you”re in one piece and I’ll see you in the morning.