After Three Day Selloff, Stocks Will Likely Bounce

Stocks took a nice drubbing yesterday, but it wasn't much of a surprise given how far this rally had gone. Now that stocks have been down for 3 consecutive days, they will likely bounce from an oversold condition.

The real schmeissing was in the bond market, where yields on the 10-year have risen to 5.12%. This makes bonds more attractive, and we could see some asset allocation shifts out of stocks and into bonds in the short-term.

The trade deficit reported this morning narrowed more than expected, which could provide a little boost to Q2 GDP forecasts. And comments from Chicago Fed President Moskow indicate the Fed is comfortable that inflation remains well contained.

Asian markets were lower overnight, but the weakness didn't spillover and hurt the opening of U.S. stocks this morning. Let's see if the early bounce can last into the close as traders prepare for the weekend. With summer starting, you begin to see the pattern of folks on Wall St. heading out early as they make their way to the Hamptons.

And please don't get me started with the Cavs last night, who looked terrible. Let's hope they can grab game 2, and go back to Cleveland with the series tied.