Market Alert - Last Hour

Stocks have rebounded off of the session lows hit mid-afternoon, but thus far the bounce is quite modest.

SP500 -43.06, -1.97%
NASDAQ -1.07.88, -2.05%
DJ30 -306.74, -1.66%
SP400 -2.48%
RUTX -2.51%
SOX -3.13%

The breaks lower are sharp with SP500, DJ30, SP400 all below the 50 day MA's and the other indices are testing those levels. It is clear that the bids were overwhelmed by the selling and that the recent uptrends over the 10 day EMA are over.

We have closed some upside positions and if this smallish bounce doesn't turn into a huge bounce we will be closing more. Anticipating using a bounce to try and work into some downside plays and perhaps some more early week if there is a reflex bounce off this Friday selling.

The cause? The usual pin the tail on the selloff reasons are offered, but there is a confluence of events. The immediate return of the Fed to talks of rate hikes and by perceived doves. Oil selling back some of the gains (really a reason?). A plethora of guidance reductions over the past 2 weeks is taking a toll.

In the end, it doesn't matter what triggered it, the real question is whether it reflects the systemic issues in the economy and companies or is just a shorter term selloff. We treat it as a sharp selloff and one that we don't want to be against if it continues next week. Thus, unless a nice bounce occurs we will be closing more positions and again, trying to work into some downside positions on a continuing last hour move higher.

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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