With a turn of the calendar the markets were smacked down hard – hopefully not an indication of things to come. We don’t officially start summer until June 21 but the heat was turned up on the bulls after some surprisingly weak economic data for a second straight day. On Tuesday following the long weekend sentiment and ISM data was poor but that did not deter the buyers from focusing on the task at hand. Today’s ADP number was startlingly low – which may indicate a bad number in Friday’s BLS report. Whatever the result, bulls and bears have been put on notice that trading this market will NOT be easy.
We normally see money flows into markets to start the month, but this is the second monthly start that was down. In fact today’s results were the worst in nearly a year. The VIX climbed 18% to close near its highs of 18.3. Yesterday’s strong rally on good volume blasted the bears who were counting on troubles overseas to hit the market – that didn’t happen, but today was a complete flip. I suspect there will be a decent rally coming as the market is nearly oversold in the short term. But the first shots across the bow has been fired – at both sides.
Technically speaking the uptrend is still in tact but is hanging by a thread.