Over the weekend we said markets were stretched, extended and overbought in the near term. On radio yesterday, we said market felt ready for pullback. Not because anything is bad. It just felt tired along with the overbought conditions along with the action yesterday. Of course, that doesnt mean markets have to pull back. Overbought can get more overbought. That said, nice gap to the downside this morning. Blame is on 10 year yield back above 3% this morning as the dollar rallies against other currencies. A strong dollar hurts our multinationals.
As we also said in the weekend report, the biggest issues for us were oil prices, debt, deficits. We were not as worried about interest rates because central banks are still easy. Oil prices continue higher this morning and to be clear, while we do not believe interest rates being over 3% is a big deal, we would rather see rates NOT go up.
With major indices sticking up from the recent move off of longer term support, we actually welcome a pullback…as long as it is controlled and rotational. (Our guess)
HD has been rallying into earnings. About an hour ago, was down $6 but as we write this, only down $1 and change. Sales did decelerate a bit.