Across The Pond

I will be travelling the rest of the week. My next post for In The Money will resume on July 6th.

Have a great week

Monday Morning Musings

The market is nicely higher in early trading, reversing most of Friday's selloff.

There isn't much in the way of market moving news. The big news was the new capital requirements for large banks that came out of Europe. The increase in capital requirements appears to be less than was feared by the market, and as such financial stocks are rallying and leading the action so far today.

Asian markets were mixed overnight, and Europe is higher this morning. There is some optimism ahead of the important vote in Greece about adopting its 5-year austerity plan that was established last week. The vote will come early Wednesday morning in Greece.

The euro is bouncing today, while the dollar is a bit weak. Commodities are also lower, with oil prices down near $90.65 and gold prices trying to hold the $1500 level.

The 10-year yield is up a bit to 2.88%; and the VIX is roughly flat at 21.1. I would like to see the VIX down on a day when the market is up, so we will have to see if this rally can hold today.

Trading comment: The S&P 500 is once again bouncing after nearing its 200-day average, which currently resides near the 1264 level. I hope that the market can continue to lift, as another test of the 200-day might not be successful the third time around. Of course, a lot will hinge on the vote this week coming out of Greece. Sentiment is still bearish enough, that a positive vote could lead to a further rally in the market. But if we get a disappointment, and the vote fails, it looks like the market would break down below this 200-day level and test the March lows of 1250.

Positive Economic Data Ignored By Investors Today

The market is lower in early trading despite some stronger than expected economic data. Yesterday, a news story surfaced that said Greece had taken the first steps toward shoring its finances by agreeing to a 5-year austerity plan with the EU and IMF. That news led to a big rally in our markets, pushing the Nasdaq well into positive territory.

The news also helped Asian markets rally overnight, and European markets gain this morning. So its a bit odd that our markets are down this much.

In economic news, Q1 GDP was revised a bit higher to +1.8%, above expectations. Also, durable goods for May came in better than expected at 1.9%, which is good news.

And oil prices remain lower after yesterday's big drop, currently hovering below the $91 level. Gold prices are also lower near $1509.

It seems that the current soft patch in the economy is causing worries about how much it will affect corporate profits. Recently, earnings estimates have held up very well, but I think concern is growing that we might see some estimate reductions.

Last nights earnings reports from Micron (MU) and Oracle (ORCL) were disappointing to the market, and the stocks are lower today.

The 10-year yield is lower to 2.88%; and the VIX is higher by 8% to 20.82.

Trading comment: The S&P 500 staged another successful test of its 200-day average and bounced higher from it. The 200-day currently sits near 1263, so it bears watching. But it looks like the market is chopping around these levels without really breaking down further. That could give stocks a small base from which to stage a bigger bounce. At least that's the bullish scenario as long as things don't fall apart with respect to Greece. Stay tuned.

Lots of Crosscurrents Hitting Stocks

The market is sharply lower in early trading on a host of concerns coming together simultaneously. Yesterday's comments from Bernanke did little to inspire confidence, as the Fed cuts its forecast for economic growth and slightly raised its forecast for unemployment. That led to a selloff in the market in the final hour of trading yesterday.

Overnight, Asian markets were mostly lower, and this morning European markets were lower on some disappointing PMI manufacturing surveys, and continued concern about the situation in Greece.

So our futures were lower before the market opened. The jobless claims report this morning was weaker than expected, which added to the selling pressure.

But the big news is that the IEA has said it will release 60 million barrels of oil into the market to help lower prices and ease disruptions from the Libya situation. I applaud the timing of this release, as it has helped push oil prices down near $91.

You have to realize that in the short-term, this hurts the market as oil and materials stocks selloff, and those two groups are a big part of the market. But longer-term, it is a big positive as it will help consumer spending, it will help inflation pressures, and it will help profit margins, all of which should provide a boost to GDP economic growth over time.

The dollar is rallying, which is weighing on commodities across the board. Gold prices have fallen back to $1518, and grains are sharply lower as well.

Another factor weighing on the market is the news that the talks on the debt ceiling in the US have hit an impasse over taxes. Markets don't like uncertainty, and the issues with the debt ceiling and the Greek bailout need to get resolved to calm the markets.

The 10-year yield has fallen back to 2.90%; and the VIX is spiking +14% back above 21.

Trading comment: The S&P 500 is testing its 200-day average support near 1262. This is an important level to watch. As I said, lower oil hurts the markets (energy and materials sectors) in the short-term but is a long-term positive. Bearish sentiment is spiking again this morning, with the VIX up 14% and the put/call ratio hitting a very high 1.29. As I have said, bearish sentiment can be a precursor to a market bottom, but you then need a catalyst to spark a rally. Let's hope the govt. can get its act together and pass this debt ceiling issue soon.

FOMC statement

Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected. Also, recent labor market indicators have been weaker than anticipated. The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan.

Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations. To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.

The Committee continues to anticipate that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

Stocks Hand On To Yesterday's Gains

The market is slightly higher in early trading, a good sign that so far we are not giving back yesterday's solid gains. The action in the market was good yesterday, with volume rising nicely and the Nazz scoring a 90% upside day (90% up volume).

Today we have the FOMC meeting and statement coming out later this afternoon. While few expect any surprises, it will be interesting to hear what Bernanke has to say about the end of QE2, the current softpatch in the economy, etc.

The euro is higher vs. the dollar this morning after the Greek PM was able to secure the votes needed to pass their measure yesterday. That should put them in shape to get the near-term loan they need from the IMF to make their interest payments, but they still have a long way to go until they can get their fiscal house in any sort of sustainable shape.

There were a handful of earnings reports last night. Fedex (FDX), Jabil (JBL), and CarMax (KMX) are all higher after reporting, while Adobe (ADBE) is trading down.

Asian markets were mostly higher overnight, although China and India are struggling to bounce along with most of the other markets.

Commodities are mostly higher, with oil prices up to $94.75 and gold higher near $1558.

The 10-year yield has drifted back down to 2.95%; and the VIX is down another -5% to 17.85.

Trading comment: As the buildup in bearish sentiment continues to unwind, the market should be able to lift a little more from current levels. The first big test would be at the overhead 50-day average, currently near 1319 (if and when). I continue to look to raise a bit of cash as things lift, and add some hedges to help get through what could be a long summer of volatility. While Greece has calmed down for the moment, I don't feel they will be out of the headlines for long.

Stocks Rally In Europe Ahead of Greek Vote

I just lost my entire post on Blogger. Very frustrating.

Markets on higher this morning on improved sentiment from foreign markets. The Greek PM has an important confidence vote later today, but the markets are signaling they think that the vote will be successful.

Asian markets rose nicely overnight, while European markets are higher across the board this morning, led by a 4% spike in Greece's market.

The dollar is lower this morning against a basket of currencies. That is helping boost commodities, with oil prices higher near $93.80 and gold prices up to $1547.

Higher commodity prices are spurring rallies in the energy and materials sectors, which are leading the markets by a wide margin. Defensive consumer staples stocks are lagging.

The 10-year yield is higher at the 3.00% level. Yesterday I showed the negative reversal in the VIX and said it pointed to lower prices. We are seeing that today, as the VIX is plunging more than -10% back down below the 18 level.

Trading comment: The market has now rallied more than 2% since I penned my article on bearish investor sentiment. We are making some sales into today's rally, to raise cash and stay defensive. Although this rally feels good so far, the market is still in a defensive position as long as the SPX remains below its 50-day moving average, which is now downward sloping.

Growth stocks today are really shining. Take a look at: APKT, ARUN, RVBD, LULU, ACOM, FTNT, EZCH, BODY, JOBS, etc.


long ACOM, APKT, ARUN

Chart of the Day: VIX Reversal

The chart that caught my eye today was that of the Volatility Index (VIX). This is the indicator that is often referred to as the "fear gauge" in the market.

This morning, the VIX started out higher, but it quickly reversed and continued to move lower on the day. This bearish action of opening higher than yesterday's high, and closing below yesterday's low is known as an "outside day" (as the high and the low are outside yesterday's range).

If this were a stock putting in that type of action, I would say that it is mostly likely going lower in the near-term. So if we apply the same diagnosis to the VIX, we should conclude that it is positioned to move lower in the near-term.

Traders know that a VIX that is moving lower is often associated with the equity markets moving higher. So a move under 20 in this indicator could be a sign that the near-term spike in volatility is set to take a breather, and that could give this market a little more room on the upside.

Monday Morning Musings

The market is slightly higher in early trading, on very little in the way of news.

Eurozone officials failed to pass any new measures when it comes to Greece's financial position. The ongoing uncertainty continues to weigh on markets.

Last week I wrote an article about how bearish sentiment was again reaching extreme levels, which is often a precursor to a market rally. But sometimes bearish sentiment can become even more bearish. Also, you need some sort of catalyst to spark that initial rally, then you usually get some short covering that fuels the early move. We still don't have that.

Asian markets were mixed overnight, while Europe is lower this morning.

Commodities are mixed, with oil prices lower to $92.50 but gold prices firm at $1540.

The 10-year yield is holding steady at 2.95%; and the VIX briefly spiked higher at the open, but has since reversed and is breaking below the 21 level currently.

Trading comment: Markets remain oversold. The Nasdaq has been down for 7 straight weeks. And I already mentioned how bearish investor sentiment has become. So the stage remains set for a relief rally, but there has been no real news today to help spark any buying. If we get some positive news on Greece this week, I think that would help.

Is Extreme Bearishness Enough For A Bottom?

As promised, here is a link to my latest article:

http://seekingalpha.com/article/275501-is-extreme-bearishness-enough-for-a-bottom

Markets Try To End Volatile Week On A Strong Note

The markets are higher in early trading, but can they hang on to the gains and put an end to the 6-week losing streak?

Economic data was mixed this morning, with the Consumer Sentiment Survey coming in below estimates at 71.8, but Leading Indicators rising more than expected at +0.8%, which is a big turnaround from last months -0.3% decline.

Plans to move quicker to stabilize Greece's fiscal position has helped improve the tone in Europe. The euro is sharply higher, while the dollar is lower.

Commodities are mixed, with oil prices falling back below $93.50, but gold prices rallying near $1537.

The 10-year yield is also bouncing to 2.95%. I think if it got over 3% we could see the equity rally pick up steam. The VIX is down -6.5% currently to 21.26. Yesterday the VIX had a huge spike, which indicates that fear in the market may have finally peaked.

Trading comment: Yesterday we saw continued spikes in all of the fear gauges I monitor. I wrote a column on how bearish sentiment is getting, and how it compares to prior market bottoms. I plan to re-post it here on our blog later today, so check back. But suffice it to say that the ingredients for more than a one-day rally are taking shape. So I want to be patient about doing more selling until we see some sort of bounce.

A Little Positive Housing Data

The market is getting a little bounce in early trading, after some mixed economic data. Coming into the morning, overseas markets saw widespread declines amid continued uncertainty over Greece.

The weak Philly Fed survey should not have been a big surprise after yesterday's Empire Manuf. Index. The Philly came in at -7.7 for June, a big drop from last month's 3.9 reading.

But jobless claims came in better than expected, and so did some housing data. Housing starts for May came in above expectations, and building permits were much stronger than expected.

Asian markets were down across the board overnight, and Europe was lower this morning. Attention continues to swirl around Greece, in terms of what and when a bailout package will look like. Of course, the bigger concern is which country could be next in line.

The dollar is flattish today, and commodities are mixed. Oil prices are down slightly near $94.50, while gold prices are a little higher to $1528.

The 10-year yield is drifting lower to 2.93%; and the VIX is flat around 21.35, which is the highest levels for the volatility index since March. So for those looking for a spike in volatility, yesterday met that criteria.

Trading comment: Bearish sentiment continues to escalate. Yesterday, the cboe put/call ratio closed at a whopping 1.36, pushing the 10-day average to its highest levels since the May 2010 "flash crash". Some commentators have said the p/c ratio may be less useful with all of the inverse etfs these days, but I am not so quick to join them. I think it shows a sustained buildup in bearish sentiment, and investors rushing to add protection to their portfolios. The fact of the matter is that if we can rally, the unwinding of all of this bearish protection will put upward pressure on the market and help fuel any snapback rally. Now we just need a catalyst!

Quick Look: Weak Economic Data Weighs On Market

The market is lower in early trading after a nice bounce yesterday that looked promising for the bulls.

It was really the weak data this morning that led to another round of selling. But trading bottoms don't come in one session, so this type of action isn't altogether surprising.

The Empire Manuf. Index fell to -7.8 in June, which is a big dropoff from the 11.9 reading that was posted the prior month. Also, the NAHB Housing Index for June came in at 13, which is down from last month's reading of 16.

Asian markets were mixed overnight, unable to carry the momentum from yesterday's gains in the U.S. In Europe, continued concerns about Greece, and the protests in the street there, are weighing on European markets.

The dollar is higher today, and that is weighing on most commodities. But oil prices are slightly higher near $99.75, and gold prices are also higher at $1532, despite the strong dollar.

So far all 10 economic sectors are lower, a stark contrast to yesterday's action. But it's still early, so we will have to see if the market can find some stability into the close.

The 10-year yield is lower to 3.05%; and the VIX is bouncing 7% to 19.53.

Trading comment: Some are calling yesterday's bounce a one-day wonder. But I still think that bearish sentiment has reached extreme levels. The put/call hit 1.71 this morning. And the markets are also at very oversold levels again. So I think it's a little late to be doing a lot of selling, and I still think that the market will see more of a bounce than just the one day that we saw yesterday.

Can Markets Hang On To This Overdue Bounce?

The markets are nicely higher this morning, after another disappointing session yesterday. The broad-based buying has pushed all 10 major S&P sectors higher, with the early action being led by energy stocks (+2.2%).

There has not been much in the way of corporate news, although Best Buy (BBY) did report positive earnings and its stock is higher.

In economic news, retail sales for May fell 0.2%, but that was not as bad as the -0.7% slowdown that many were expecting.

Asian markets were mostly higher overnight after China report consumer and producer price reports that were generally in-line with expectations. China's central bank did raise the reserve requirement ratio by another 50 basis points, as had been widely expected.

The dollar index is flat so far, while most commodities are higher. Gold prices are up slightly to $1522, and oil prices have bounced above $98 after yesterday's sharp selloff.

The 10-year yield is higher to 3.07%; and the volatility index is down a sharp 8% to 18.0, but still above its 50-day moving average near 16.95.

Trading comment: Yesterday we took off some of our short-term hedges in anticipation of a bounce. While the market is strong out of the gate this morning, I am hoping that this bounce turns out to be more than the 1-day wonder like we say on May 31st. That said, I still think it is a good idea to use any strength to cut weaker positions, ones that are low conviction, and raise cash to prepare for another downdraft. That will put us in a better position to weather the volatility, and have capital to add to our winners when the dust finally settles. One thing that does make me think this bounce could last a bit is that bearish investor sentiment is hitting some extreme levels on several of the indicators that I follow.

Merger Monday Makes A Comeback

The market is slightly higher in early trading on Monday, but not quite as much as I had hoped we might see after Friday's sharp selloff. Last week's decline market the 6th straight weekly decline for the market, a streak not seen in quite some time. With the markets oversold again, and bearish sentiment growing, I think another bounce is likely overdue.

While there hasn't been any big market moving news this morning, we did see a wave of merger announcements. Namely, VF Corp (VFC) is buying Timberland (TBL) for $43, a hefty premium. Honeywell (HON) is buying EMS Tech (ELMG), also for a nice premium. And Gerber Scientific (GRB) will merge with Vector Capital for a big premium as well. So this wave of mergers shows that equity valuations remain attractive for acquirers.

The dollar is down today, but commodities are mostly weak also. Gold prices have fallen back to $1527, and oil prices are lower near $98.66.

Asian markets were mixed overnight, but China didn't announce another rate hike so far. The 10-year yield is higher to 2.99%; and the VIX is slightly lower to 18.75. It is a bit surprising that all of the recent selloffs have not been able to push the VIX above 20.

Trading comment: The bounce looks a bit tepid so far, but it is still early in the day. The market is very oversold, which makes a bounce this week more probable. That said, the markets remain in a big picture defensive posture, withe all the major averages well below their 50-day averages, and nearing their 200-day averages. I think the markets will likely bounce, but that the next leg down will likely bring the 200-day averages into play. That will likely present a better buying opportunity, so any near-terms buys are strictly for trades to play for a bounce.

Quick Look

The market is flattish in early trading, with not a lot in the way of market moving news out this morning.

Bernanke gave a speech yesterday that contained little new information, and little in the way of encouraging commentary. Most of it focused on the below average rebound the economy has experienced thus far, and the need for the Fed to keep its foot on the gas pedal.

The World Bank cuts its 2011 forecast for global growth, but they are a little late to the party in this regard so this should not be viewed as a revelation.

Eurozone GDP was released, and came in at 0.8%. That has done little to inspire investors overseas, and Europe's markets are lower today. Overnight, action in Asia was mixed.

The dollar is higher today, which is weighing on gold prices. Gold has fallen back to $1536. But oil prices are higher to $100.70 after OPEC decided not to raise production levels yesterday.

The 10-year yield is back below the 3% level, currently 2.96%. And the VIX continues to hover above its 50-day average, currently 1.5% lower near 17.80.

Trading comment: Yesterday's action was disheartening for those looking for a bounce. It also shows why you need to be nimble in this market. The market opened nicely higher, and we proceeded to do some selling and lighten up on a few names. But by the day's end, the rally had completely faded. I still expect another bounce or two, and plan to execute the same plan as yesterday. Raise some cash, get a bit more defensive, and put ourselves in a better position to take advantage of this correction - but not until we feel it has run its full course. That requires patience, a rare commodity in today's frenetic trading environment.

Stocks Enjoy An Early Bounce

The market is higher in early trading, after another disappointing session yesterday. There was no real market moving news this morning, so this is more of just a reprieve to the selling. It is likely a combination of dip buying and short covering.

Intl. Paper (IP) made a big for Temple-Inland (TIN) for a big premium, but the bid has been rejected so far.

Later today, Bernanke will give a speech on "The U.S. Economic Outlook", where investors will be listening for his comments and views on how things will look post-QE2, and how the Fed will continue to stimulate monetary policy.

The Treasury will hold an auction of 3-year Notes today, with more auctions to come later this week. The 10-year yield is higher today at 3.04%, and the yield curve is actually steepening. This is a good sign for those who are worried about the economic slowdown, as the steep yield curve still points to a growing economy.

Asian markets were mixed overnight. There was a report out last night suggesting that China might hike its benchmark rate again over the weekend. The Reserve Bank of Australia held its rate steady at 4.75%.

Commodities are mostly mixed, but oil prices are lower again near $98.40, and gold prices are lower also to $1542 after yesterday's gains.

Trading comment: Today's bounce looks like it is coming on relatively light volume so far. I still want to adopt a more conservative posture while this correction runs its course. I am looking to use this bounce, and any further strength, to lighten up on positions, raise cash, and implement some hedges. If this correction follows the normal course, it will have bounces along the way, but at some point we could test the March lows at which point bearish sentiment will likely spike higher. That could present another solid buying opportunity. But let's not put the cart before the horse.

Monday Morning Musings

After 5 straight down weeks, the market has opened lower again. That said, I still feel like a bounce is in order this week.

Financials are very weak this morning, after banks sold off hard in Europe following pessimism over any Greek bailout and the potential hit euro banks could have to take.

There has been no major corporate or economic news this morning to move the markets, so catalysts are lacking. The ASCO meeting over the weekend will keep the focus on drug and biotech stocks in the near-term. And the Apple (AAPL) developers conference will be the big news later today, where CEO Steve Jobs is expected to make an appearance.

Asian markets were mixed overnight; Hong Kong and Shanghai were closed, but Japan was lower after Tokyo Electric Power could see losses of up to $7 billion and may be looking at bankruptcy protection.

The dollar is up slightly today, while oil prices have fallen back to the $99 level. Gold prices are higher, topping $1550 again.

The 10-year yield is up near 3.02%; and the volatility index is 2% higher to 18.31.

Trading comment: The market feels very heavy this morning, but I still expect a lift this week. The put/call ratio hit an extremely high level of 1.24 on Friday, and averaged 1.06 for the week. That's a pretty extreme bearish level. The ISEE sentiment index was equally bearish. So after 5 down weeks, and the markets back at oversold levels, I would look for a reprieve.

That said, the indexes remain below their 50-day averages, QE2 is ending, and the summer slowdown is upon us. So I would look to use any upcoming weakness to sell or trim non-core positions, and continue to build up a more defensive posture that will help investors weather continued choppiness in the market.

long AAPL

Do you use OpenTable??

Please take my poll at:

http://poll.pollcode.com/kJ0w

Payrolls Data Disappoints Investors

The market is lower in early trading, but well off its opening lows after a disappointing jobs report before the open.

Nonfarm payrolls for May increased by only 54,000, far less than the 169,000 economists were looking for. Private payrolls increased by 83,000, also less than half of what was expected. And the unemployment rate ticked higher to 9.1%.

After this report came out, the futures market took a big hit, and when I left the house this morning the Dow was expected to open down around 140 points. But that market the low for the day so far, and soon after the market opened, another economic release came out that was fairly positive.

The ISM Services Index for May came in at 54.6, which was better than expected and up from 52.8 in April. Given that two-thirds of our economy is service-based, this is a pretty positive report for the economy.

As such, the market bounced, and currently the markets have recouped about half of their earlier losses. It is still early, so we will have to see how it goes into the close today ahead of the weekend. I wouldn't be surprised to see some short-covering into the close.

The 10-year yield briefly dipped as low as 2.95%, but has since bounced back to 3.02%.

Oil prices have dipped below the $100 level, while gold prices are higher to $1543.

Asian markets were mixed overnight, with some chatter about a possible rate hike in China over the weekend.

Trading comment: The markets are set to post their 5th consecutive weekly loss. I expect stocks to bounce next week, so I am going to buy some things for a trade. But as long as the major indexes remain below their 50-day averages, I will remain in a big-picture defensive mode. The Traders Almanac says that June is the second worst month of the year for stocks historically, and I have my own hesitations about the summer doldrums. So while it's always okay to try to take advantage of the market's trading ranges, now is not the time to get aggressive.

Quick Look: Stocks Steady In Early Trading

The market is slightly higher so far this morning, after a couple of positive economic revisions.

Productivity for Q1 was revised higher to 1.8% (from 1.6%) and unit labor costs were revised lower to 0.7% (from 0.9%). With unit labor costs this low, and continued significant excess capacity in most parts of the economy, it's hard to see a big pickup in inflation right around the corner.

Asian markets got whacked overnight, following the large selloff yesterday in U.S. markets. The dollar is lower today, but that isn't helping commodities much. Oil prices are down slightly, struggling to hold the $100 level, while gold prices are giving back yesterday's gains, trading near $1537.

The 10-year yield is trying to get back to 3.0%; and the VIX is lower to 17.98.

Trading comment: Yesterday's negative action pretty much negated any positive indications from the previous day. The S&P 500 is back below its 50-day moving average, which means we are in a more defensive posture for the time being. Bearish sentiment has started to build, but I suspect its going to take more frustrating selloffs to bring out more bearishness, such that sentiment gets back to the point that the market can bottom and launch on another more sustainable rally. For now, I expect choppy action to continue. On a positive note, its nice to see AAPL holding above its 50-day average.

long AAPL

More Signs Of Economic Slowdown

The market is under selling pressure this morning, after a handful of weaker than expected economic reports has investors questioning the strength of the economic recovery.

The ISM Manufacturing Index came in below expectations at 53.5, well below last month's reading of 60.4, and the lowest level since Sept. 2009.

Also, the ADP Employment report showed that private payrolls in April increased by just 38,000, vs. consensus for 170,000 payrolls. That is quite a discrepancy, and has caused several brokerage firms (including Goldman and Credit Suisse) to lower their estimates for Friday's jobs report.

Asian markets were mixed overnight. China's manufacturing survey also eased to a nine-month low (52.0), while Australia's GDP contracted -1.2% in the first quarter, as the Queensland flooding affected the nation's economy. They expect a strong rebound in 2H11.

The economic data has pushed the 10-year yield below the 3% level, currently 2.98%. And the volatility index (VIX) has jumped +8% this morning to 16.65.

Financials are getting hit the hardest this morning, down -2.1%. Large-cap tech is actually faring quite well, with several notable names bucking the weakness so far, including: AAPL, GOOG, VMW, MELI, PCLN, APKT, and CHKP.

Oil prices are lower to $101.75, while gold prices are up a tad near $1537.

Trading comment: It looks like yesterday's strength could have been more month-end window dressing than anything, and that today reality has sunk back in. Some of the worry certainly has to do with QE2 ending in June, and the worry about the economy growing on its own, post-stimulus. But we have had the same concerns each of the last 2 summers, with the economy picking back up later in the year. I don't want to be pollyannish about this, but right now I am looking at the data as simply lumpy and uneven, as opposed to joining the camp looking for a new downturn.