European Bank Concerns Ease, At Least For Now

The market is slightly higher in early trading, after yesterday's pronounced selloff. Asian markets were lower overnight, with China -1.2%, but European markets are higher this morning after a short-term debt offering from the ECB showed low demand. This was taken as a sign that liquidity concerns related to an expiring ECB lending program may not be as bad as feared.

In economic news, the ADP employment report showed payrolls for June increased by only 13,000 (vs. 61,000 consensus). This has some worrying that Friday's jobs report could also be weaker than expected. Current estimates are for a decline of -100,000.

CNBC reported that new bank fees and taxes of roughly $19 billion have been removed from the financial regulation bill, in an attempt to get it passed.

The dollar is lower this morning, while the euro is bouncing. Oil is higher near $76.40, while gold is also bouncing to $1246.

The 10-year yield is flat at 2.96%, signaling weak economic growth expectations; and the VIX is down 4.3% today to a still high 32.65, after yesterday's 17% ramp higher. (we trimmed our VXX position into the spike).

Trading comment: I got some comments on why I had been counseling being defensive lately, but I think recent market action has pretty much justified my stance. Today should be interesting as many leading stocks are testing their 50-day averages, so if they can bounce the broad market should bounce as well. But if they fail at this key moving average, it could mean more rough sledding.

Here are some examples of the stocks I am watching: GMCR, AAPL, FFIV, VMW, AKAM, MELI, APKT, SNDK, DECK, NFLX, PRGO, RBCN

long AAPL, FFIV, VMW, VXX