No Change From ECB, But Draghi Says Bank Is Ready To Act

Stocks are bouncing back from some of the weakness seen over the last few days, although looking at a chart of just the S&P 500 doesn't really highlight any weakness.  The rotation out of high growth names but into more value-oriented stocks has kept the SPX near its recent highs while taking other indexes like the Nasdaq and Russell 2000 down below their 50-day averages.

The ECB held its latest policy meeting and opted to keep rates unchanged at 0.25%.  ECB President Draghi did not announce any other policy moves but said the bank stands ready to act in June 'if needed'.  The Bank of England also kept its policy stance unchanged.

Overnight Asian markets ended higher.  Chinese trade data came in better than expected with both exports and imports posting positive year/year growth vs. expectations for declines.  Australia's unemployment rate held steady at 5.8%.

The 10-year yield is trying to bounce from that 2.60% level, but not having much success.  It still seems odd that the 10-year can't move higher if the market still expects economic growth to pickup in the second half of the year.

Oil prices are slightly lower near the $100 level, while gold prices are up a touch to $1290.

The volatility index remains at low overall levels around 13.25.  The recent selloff in momentum stocks hasn't really pushed volatility expectations higher.

Trading comment: Historically market selloffs would start with the high growth names but eventually the selling would get around to the value stocks also.  And that would mark the beginning of the end of most garden variety corrections.  But in a world with QE from the Fed, things seem to work differently.  That makes it difficult this time around to tell if the correction will be solely concentrated in the growth stock names, or if it will eventually spill over into the value stocks.  The way that the SPX has held up lately has us leaning to the possibility of new highs in the SPX as we head into early summer.  So we are looking for new areas of leadership.