Japan's market got a big bounceback last night, rallying +5.7% after its big 2-day plunge. Other markets in Asian were up overnight as well.
But in Europe, Moody's downgrade of Portugal's debt weighed on those markets. In addition, ongoing social and political unrest in the Middle East and the continued concerns about the nuclear facilities in Japan have further hurt sentiment.
Our markets opened down slightly, and have since added to the declines after some weak economic reports. Housing starts for February plunged more than expected, and the PPI inflation figures rose more than expected.
The flight to safety trade is back on today, with Treasuries rallying, the dollar a bit higher, and gold prices up as well. The rally in bonds has pushed the 10-year yield down to 3.22%. Gold prices are higher back to the $1400 level, and oil prices are also higher today near $99.50.
Trading comment: Yesterday's bounce back from the morning lows was encouraging. The market is getting further into oversold territory, and should be getting closer to a bounce. I put some of our cash to work yesterday in big-cap stocks that have pulled back with the market. The S&P 500 has now tested the 1260 level twice and held, so we could get some short-covering if the market is able to mount more of a turnaround. Bearish sentiment is also on the rise, with the put/call ratio above 1.0 yesterday and opening at a whopping 1.99 today. That's a lot of puts being bought, and could mark a short-term extreme in bearish sentiment.