Not Much To Like Today

The market is having a rough go in the first hours of trading for 2008. As you can see in the first chart above, the Nasdaq is struggling to stay above its 200-day moving average.

Remember what my public enemy #1 has been? The Yen. And the yen is spiking +2% today (see the Yen ETF chart #2 above). The market has simply been uable to rally on big up days for the Yen. So this is something we need to watch.

Also, a weak economic report has the bond market again worried about recession. The yield on the 10-year Treasury (chart #3) has broken back below the psychological 4.00% level. This is kind of a confidence indicator, and I like to see it stay above 4% to keep the recession mongers at bay.

On the plus side, measures of investor anxiety that I montior are very elevated today, which should help to put a floor under stocks at some point.

• The ARMS Index exceeded 2.50 this morning, one of the highest readings in months;
• The CBOE put/call ratio hit 1.34 today, a highly elevated level;
• The ISEE Sentiment Index opened at an extreme depressed reading of 68

I am not going to let one day color my outlook. The bears can have the day, although it's not over yet. But I still think the market is mired in a near-term trading range, and that at some point in 2008 we will break out of that range on the upside.