Tuesday’s stock market rally looked better in the media than in reality. Early strength was sold and there was not much conviction from the buyers. Unless we see the bulls step up and close above Tuesday’s high, stocks look like they need a pause or pullback here. Closing below Dow 15,175 should set off even more selling while closing above 15,550 should entice more buyers back in.
I am concerned here that high yield bonds have taken it on the chin and even investment grade has softened. This was also seen last quarter without any consequences, but the more interest rate sensitive sectors like utilities, REITs and telecom are also under serious pressure. Might this be the first significant crack since the rally began in November?
