…Now Back to the Equity Markets
The markets had their first across the board weak day in quite a while. The economic data came out weaker than expected both in the US and Europe, and our markets demonstrated their displeasure.
Europe is slowing down especially in the weaker economies of Greece and Portugal, and France seems to be stalling. The finance ministers of Europe have just double the lending facility from 250 billion Euros to 500 billion to help the sovereign nations. Looks like more printing is in store for Europe.
In the US, our consumer spending was less than expectations. It looks like our spending engine too may be stalling.
The good news is that our markets came off their lows of the day and staged a late rally recouping some of their losses. The DOW and S&P both ended down about 1/3% and the NASDAQ about 1/2%. Energy and basic materials, the strongest sectors as of late were the weakest sectors yesterday along with some of the commodity sectors.
Overall volume was brisk and higher from the past few days but selling was not alarming. Lowry Research tells us that Down Volume on the NYSE was only 54% but higher on the NASDAQ at 67%.
One day does not make a correction or sell off and there is nothing yet based upon volume or price movement to indicate a selloff is imminent. However, the market is technically overbought, and if we get more bad economic data and/or investor sentiment changes, selling could accelerate.
We need to pay close attention to over the next few days to see whether this is just a pause or correction, but as always, price and volume will be key. The midterm bullish trend is still firmly in place, thus far it is just the short term that is in question.
