Market Likely Bouncing From Oversold Levels

We got some strong economic news this morning, in the form of retail sales. May retail sales rose +1.4% (vs. +0.6% consensus), bouncing back from a weak April. The bond market doesn't like to see the strong economic news right now, as it continues to put pressure on higher rates. But the stock market also was worried that economic growth was slowing too much, so this data helps refute that notion, and also points to a still strong consumer.

Bond yields are slightly lower, after a brief spike higher, with the 10-year yield around 5.20%. Bond investors will likely take advantage of yields at these levels, which have risen nearly 60 basis points in the last 10 days.

Asian markets were mostly lower overnight, except China which bucked the weakness. And our stock market, which opened higher, has been building on its gains so far this morning. I think much of this has to do with the fact that the rececnt selloff in stocks pushed them into oversold territory, so a bounce is certainly in order.

The SPX closed right at its 50-day last night, another area where you usually see the index find support. If the 50-day level is broken in the next week or so, it will likely indicate a bit longer correction is in order. But let's take it one day at a time.