The market is lower again this morning after weakness in overseas markets has been the primary driving factor behind the selling.
There were no economic reports here in the U.S., as investors took their cues from Asia and Europe. Asian markets were lower across the board overnight, led by a 2.9% drop in China. Europe is also lower this morning after Italy had its debt rating downgraded by S&P over the weekend, and Fitch downgraded Greece again.
This has also led to selling in the euro, and a bounce in the dollar. We are actually seeing the old "flight to safety" trade back on, with buying in the dollar, U.S. Treasuries, and gold.
Gold is up to $1511, but that is about the only commodity trading higher today. Oil prices have fallen back to $96.65, and the CRB Index overall is down roughly 1.3%.
Consumer staples stocks are down less than the market so far, but all sectors are in the red. Some food stocks are bucking the weakness, like Panera (PNRA), Chipolte (CMG), and Cheesecake Factory (CAKE).
Last week's IPO darling, LinkedIn (LNKD) is nearly 10% lower today, trading back near $84, which is slightly above the price at which it began trading on the first day it came public.
The 10-year yield is lower to 3.10%; and the volatility index (VIX) is up 6% right now to 18.55.
Trading comment: Bearish sentiment is on the rise. The CBOE put/call ratio averaged more than 1.0 for all of last week; the bull-bear spread in the AAII survey fell to -15%, the lowest level since last August; and the market is getting oversold again after 3 straight down weeks. The rub is that the S&P 500 is only 4% below its high, and we know that a 10% correction could easily occur this summer. My thoughts are just that any correction won't come in a straight line, and I think the bears may be overreaching at the moment. As such, I would wait for another bounce before doing any more selling, a strategy that worked well last week.
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