After two days of getting pounded stocks rebounded lead by the NASDAQ composite index. Volume was lacking and today’s bounce looks to be a dead cat bounce for now. While it was nice to see the market bounce it is likely just a pause before we continue lower. We could be wrong, but given how stocks like GOOGL look it may be some time before we turn around and find a new market rally. Let’s not forget this is summer trading and it will likely to prove like other summers. We will see how this plays out, but for now we’ll remain cautious.
Crude oil lifted more than 3% on the session nearing a $48 handle. Subsequently, Energy was the largest gainer on the session followed by Information Technology. Utilities took a break from leading the market inching out gains on the session. We will certainly need to see more from this market before we really have any confidence whatsoever. In the meantime, we’ll manage our signals accordingly.
An interesting development continues to be the lack of “fear” in this market. For one, volume continues to drop off a cliff and there is no fear according to the VIX index. What this means is anyone’s guess, but option buyers are not buying into the future becoming more volatile. Do not try and make heads or tails of this market as it is clear something is broken. Central Banks have skewed the view of risk. This fact will bleeds into all the financial markets including options. Skewed this market may be, but will the invisible hand slap the Fed rendering them useless?
For now, most are looking forward to the long weekend ahead. In the meantime, take it slow and keep your losses small!
