The markets opened higher this morning on the heels of some solid economic data and also an attempt to bounce from yesterday's late day selloff.
The December Case-Shiller Home Price Index rose 6.8%, on top of last month's 5.5% gain. Additionally, new home sales for January rose to 437,000 from December's pace of 378,000. This data has helped boost homebuilding stocks in early trading.
Separately, the latest consumer confidence reading for February rose to 69.6, well above estimates and above last month's reading of 58.6.
But the spotlight today will be on Fed Chairman Bernanke who is appearing before the Senate as part of the Humphrey-Hawkins testimony. He will likely reiterate the Fed's stance to remain accomodative until economic conditions warrant easing back on asset purchases and raising interest rates.
Europe's markets are lower for a second day after Italian elections remain uncertain and worry investors about the fate of recent economic reforms in Italy. Italy's stock market is down -4% today, and weighing on Europe at large.
Asian markets were down across the board overnight on the heels of a big down day in the US as well as continued reports out of China suggesting that they are looking to tighten property measures.
The dollar is flattish today and commodities are mixed. Gold prices are bouncing above the $1600 level to $1611, while oil prices are weak again down near $92.50. Copper and silver prices are higher.
The 10-year yield is fading further back down to 1.85%.
And the volatility index is down 5% to 18.0 after spiking a whopping 35% yesterday, it biggest move since August 2011. In our experience, big spikes in the VIX like yesterday don't usually market the end of higher volatility. So we are managing risk appropriately.
Trading comment: This morning's bounce was fairly weak and is already beginning to lose steam. Yesterday's selloff came on high volume, and the number of distribution days (high volume selling) in the market has grown recently. We think this pullback has more work to do, partly in terms of testing lower levels on the indexes but also in terms of time. Most selloffs take somewhere in the neighborhood of 4-6 weeks to run their course. So in that sense we are still in the early phases of this current correction.