You Call That A Bounce?

The market is only slightly higher in early trading despite the market back in oversold territory and down the last 7 of 9 days.  The futures were pointing to a stronger open early this morning, but the enthusiasm quickly faded.

The latest Empire State Manuf. Index improved to 17.1 in May from 6.6 in April.  Also, the NAHB Housing Index came in better than expected at 29 vs. 25 the previous month.

Futures were pointing to a strong open, but when the news hit that no agreement has been reached in Greece on an elected government the futures lost some ground.

The news also hit the euro vs. the dollar.  Commodities are slightly weaker, with oil prices at $94.70 and gold prices a bit lower to $1554.

The 10-year yield is still at low levels near 1.77%.  And the VIX is only 2% lower to 21.40, after reaching multi-month highs yesterday.

In earnings news, Groupon (GRPN) is soaring on a combination of short-covering, which began yesterday, and a solid earnings report that has caused additional short-covering today.  Home Depot (HD) reported in-line earnings but its stock is lower in reaction.

Trading comment: So far this is a very weak bounce.  I think bulls really would like to see the market build into the close and for volume to pick up as well.  The lack of buying enthusiasm so far is notable.  The SPX is hovering right near the 1340 level that marked the March lows.  Bearish sentiment has been on the rise lately, which should be supportive of a near-term bounce that I have been looking for.  It's hard to tell how much of this is concern from Greece (and Spain), but I'm sure that is certainly a factor.  Sovereign bond yields and also CDS prices have all been on the rise of late.  Credit default swaps are at multi-week highs, but still below levels seen earlier this year.  Maybe some good news out of Greece regarding its political strife would serve as a catalyst for a rally.