Quick note on yesterday’s market action. If it wasn’t obvious, this was a fear move against the ongoing trouble in Euroland. Volatility spiked, as the US Dollar, long dated Treasuries and gold all moved up in tandem – a sure sign of safe haven buying. Breadth however was not bad at all, and this looks to me like a move that relieved overbought conditions (once again), rather than the beginnings of a more serious correction.
Stocks have now printed two heavy volume distribution days – April 16th and 27th – after a long rally. This isn’t necessarily bearish: the close only brought us back to early April levels on the S&P 500, and the up trends are still intact on every major index. Caution however is warranted as always.