Nasdaq Bounces, Biotechs Lag
The markets started off on a weak note again this morning, but have since bounced into positive territory. The Nasdaq is leading the bounce back as dip buyers step into tech stocks. But biotechs continue to lag and underperform the Nasdaq.
There hasn't been any major economic or corporate news overnight. Earnings season starts soon and for the most part the bar has likely been lowered for many stocks mainly due to the fact that stock prices have pulled back in the last couple of weeks.
Overnight, Asian markets ended mixed. Japan sold off after the Bank of Japan made no changes to its policy stance and did not see the need for additional stimulus at this time. China rallied even though the People's Bank of China also does not have plans for any immediate monetary easing.
Europe's markets are also lower today. Great Britain's industrial production rose 0.9%. And Swiss unemployment fell to 3.3% from 3.5%.
Commodities are higher with oil prices near $101 and gold prices bouncing to $1310.
The 10-year yield is holding the 2.70% level so far. And the volatility index was higher earlier but has reversed lower as stocks have started to bounce. It is currently trading near 15.10.
Trading comment: The S&P 500 came down to test its 50-day average this morning and is seeing a bounce from those levels. This is normal action, and as we know no correction comes in a straight line. But the other major indexes are now below their respective 50-day average support levels and that likely means it makes more sense to remain defensive. We could see stocks bounce from here a bit more, but then they will likely come down again and it is often at that juncture that investors are presented with a better buying opportunity. Investor sentiment has also been on the complacent side and we would like to see signs of less complacency accompany the pullback.