One of the good things about recent selloffs is that they have been accompanied by lower volume levels, so they did not look like big distribution days.
Asian markets were lower overnight and Europe is down this morning. There have been some concerns swirling about China's growth rate and how much it will cool. This has the emerging market ETFs trading lower this morning, as well as commodities.
The dollar has also been firm (safety trade), which is weighing on commodities. Oil prices are lower to $105.90 and natural gas prices are lower also. Gold prices have eased back below $1650, with silver and copper prices lower as well.
Financial stocks are bucking the early weakness and trading higher while all other sectors are negative. Energy stocks are down the most so far. Defensive consumer staples are down only slightly as a group.
In corporate news, Tiffany (TIF) raised guidance and its stock is spiking. But Adobe (ADBE) reported disappointing earnings and its stock is lower.
The 10-year yield is slightly lower after another big spike higher yesterday. It is currently at 2.35%. The volatility index (VIX) is only 2% higher so far to 15.35. I think I would have expected a bigger pop in the VIX considering the low levels we are at.
Trading comment: Since the market bottomed last winter, most pullbacks along the way have been brief 1-3 day affairs. And each time the market quickly recovered to go on to make higher highs. It will be interesting to see if the same pattern appears this time around. But considering investor sentiment has yet to reach bullish extremes that have preceded longer market tops in the past, I would remain in dip buying mode. I have mentioned focusing on individual stocks, and I would add sector rotation to the mix. For example, if energy stocks continue to pullback they will likely present a good buying opportunity.
KAM Advisors has long positions in VXX
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