Early Bounce From 2-Day Selloff

The market is bouncing in early trading following the 2-day selloff that took the major indexes down by roughly -2%.  I don't expect a big pickup in volume as its Friday, so traders will have to wait until next week to see if sellers emerge again or if the brief selloff was enough to work off the recent overbought condition.

There have been a few more earnings reports trickling in.  On the upside are HPQ, DRI, AIG, and PSA.  On the downside is ANF.

There are no major economic reports to speak of today in the U.S.

Asian markets were mostly lower overnight.  China and Hong Kong both closed lower on continued concerns that Beijing will move to further tighten policy to cool home price speculation.  The central bank head in Australia said they may be done lowering rates as they wait for previous cuts to work their way through the system.  And Singapore reported GDP rose +1.5%, above expectations.

Europe's markets are higher across the board today as they too rebound from sharp 2-day selloffs.  Contributing to the rebound was a strong business climate survey in Germany that rose to 107.4.  The FT is reporting that Bankia will report an annual loss of 19 billion euros next week, which would be the largest loss in Spanish corporate history.

The dollar is higher for a third day and still pressuring commodities.  Oil prices are a bit lower near $92.70 and gold prices are fading a bit also down to $1572.  Copper and silver prices are weak again also.

The 10-year yield is lower to 1.96%.  And the volatility index is hovering right around the 15.0 level.  The VIX had a very strong spike the last 2 days, rising as much as 30% from the start of the week.

Trading comment: Yesterday we lightened up a bit on our ETF hedges after a 2% pullback.  We still held on to some, and would look to scale out of more if this pullback has more work to do in the next week or so.  Lots of stocks are extended, and even if the market is down going down sharply it could take some time for many stocks to consolidate their recent gains and build a new base if they are to continue higher.