Market Gets A Bounce After Yesterday's Selloff

The market is getting a lift in early trading, although it remains to be seen if it can last until the closing bell. Remember, it wasn't that long ago that we saw repeated up opens in the market get sold into the close.

Asian markets were down across the board overnight, carrying over the weakness that the U.S. markets experienced yesterday. There has been some question as to whether the downgrade of $12 billion in subprime debt was enough to cause yesterday's selloff.

Let me repeat, that I believe the news breaks with the cycle. The market had gotten overbought, and was due for a selloff. So yesterday's news merely provided a convenient catalyst for everyone to take profits at the same time. That is why the breadth was so negative yesterday.

The bears are pressing their hand, and trying to knock the market lower still. The SPX is struggling to stay above its 50-day average, and hasn't made a new high since June 1st. As such, it is likely that this correction could last a bit longer, though I don't think it will be too severe in terms of how low we go.

Bond yields are coming closer to testing the key 5.00% level, with the 10-year yield currently near 5.05%. If you look at the chart of the 10-year yield like you would a stock, you would likely conclude that the trend is down right now.