Bears Finding It Difficult To Knock Market Down

The market pulled back sharply from its intraday highs yesterday, but the overall declines were mild compared to recent selloffs. Today, the bears are again finding it difficult to keep a lid on this market. If this market can simply trade sideways while working off its overbought condition, that would be bullish and portend more upside.

In corporate news, Alcoa (AA) slashed its dividend and announced a stock offering to help improve liquidity. This is weighing on most materials stocks, along with comments from Rio Tinto (RTP) who said that the slump in commodities will continue to weigh on financial results.

In economic news, the PPI came in at +0.1%, below the 0.4% that was expected. Housing starts and building permits were above expectations, but I wouldn't mind seeing these figures remain low while the country works off the oversupply of homes on the market.

Asian markets rallied overnight. The dollar is slightly higher this morning, pushing gold prices lower. But oil is bucking the weakness in commodities and rising above $48. The 10-year yield is consolidating around 2.94%, and the VIX is -2% lower to 42.90, still just above its 200-day average.

Trading comment: I was hoping for more of a pullback, which we still might get this week. The VIX hovering above 42 makes me think a shakeout day could be in order. But I would like to use that weakness to add some long exposure to the portfolios. Patience has been key in this market, and I'm mindful not to chase an overbought market.