Was yesterday’s drop just a replay of last Thursday or the start of something worse?

Buy on the dip reflex is still in force today

Last night I posted that today would be critical for this market’s buy on the dip reflex. Yesterday’s move up after the Wednesday rout wasn’t convincing. As long as traders and investors treat any dip as an occasion for buying, it will be difficult for this market to build up any downside momentum. So far, today’s market action is a very strong vote in favor of the continued working of the buy on the dip reflex.

Was yesterday’s drop just a replay of last Thursday or the start of something worse?

Was market action today, May 11, reassuring or scary?

This, Thursday, May 11, was one of those “half full” or “half empty” days. U.S. indexes finished the day largely unchanged. The Standard & Poor’s 500 index was off 0.22% to 2394.44. The NASDAQ Composite slid the same 0.22%. And the Russell 2000 small company index was off 0.66%. That the indexes finished the day roughly unchanged would have been a huge surprise to anyone who had only checked in during the morning hours.

This is one odd market: How odd? Look at the SKEW

This is one odd market: How odd? Look at the SKEW

On one level the U.S. stock market makes perfect sense. The Standard & Poor’s 500 stock index is up 6.64% for 2017 and as you’d expect volatility has tumbled with the CBOE S&P 500 Volatility Index down 22.72% for the year. But another volatility index the CBOE SKEW Index is up 7.5% for 2017. How can two volatility indexes be giving such different pictures of the level of fear, nervousness, and expected volatility in the S&P 500?

This is one odd market: How odd? Look at the SKEW

Nervous as we hit new high after new high? First dip, whenever, is likely to be limited

Enough folks have missed the surprise post-election Trump rally and its continuation in 2017 that the first break in this market is likely to be shallow as money now on the sidelines moves to get in on the rally at “bargain” prices. That cash is now just waiting for the first dip to buy. Mutual fund cash positions have reached an average of 5.6%, according to Bank of America Merrill Lynch