A Change Of Character For The Market

The market is getting a bounce in early trading, although oil is up again so it remains to be seen if today's early strength will hold.

Oil is higher again amid continued fighting in Libya as well as turmoil in North Africa. Saudi Arabia's stock market fell 4% after suffering a 7% drop in the prior session. Oil is currently up another $1.50 to $101. The longer oil stays high, the more it will begin to effect the economy and transportation sectors.

In economic news, the ADP Employment report came in much better than expected as private payrolls grew by 217,000, and January numbers saw upward revisions. This could bode well for a strong payrolls report on Friday, although sometimes the big monthly jobs report does not follow ADP's numbers.

Asian markets were down overnight; the dollar is also lower today, which is boosting gold prices to $1435, and cotton futures were limit up again; the 10-year yield is higher to 4.36%; and the VIX is down 4% back to 20.10 after a big spike higher yesterday to 21.0.

Trading comment: Lately we've seen the market firm in early trading, but selloff as the day wears on with the market closing at or near its lows. If this continues, it would mark a change of character for the market from the last several months. During that time span, the market was often weak early, but would then rally and close near its highs for the day. Closing at its highs is a hallmark of bulls markets, while late-day selloffs are more common during corrections.

Yesterday's selloff was met with higher volume on the Nasdaq, making for a 5th distribution day in recent weeks. This also increases the likelihood that the market has more work to do on the downside before this correction runs it course. Be patient.