Markets Bounce After Big Selloff

The indexes fell -2% yesterday for the first time in months, and took the S&P below its 20-day moving average. The VIX saw an enormous spike higher, 30%, which shows fear was on the rise. The put/call ratio rose to 0.89, but did not top the 1.0 level I watch for.

This morning the markets are taking a breath, and bouncing from yesterday's lows. There were some more solid earnings reports (BRCM), and a lack of more headlines out of Europe.

Asian markets were lower overnight; the 10-yr yield is bouncing from yesterday's plunge to 375%; and the VIX is giving back -7.7% to 21.03.

Yesterday's Goldman Sachs (GS) fanfare overshadowed that there is an FOMC meeting taking place, and we will get the statement from them later today. I don't think we will see much change in the wording of their statement, but investors will parse the language closely for any nuances.

Trading comment: Yesterday's whack was a pretty good one, but I suspect we haven't seen the lows yet. The S&P 500 has pulled back roughly 3% from its highs so far. That said, there have been many individual stocks that have pulled back more significantly, and those might worth picking at. My strategy is to add to the individual names that I like, that have pulled back recently, and then look to add more exposure by putting more cash to work when I get a sense that the overall market has bottomed as well.


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