Overnight, the markets were treated to a rise in global yields, most notably in Europe. This caused a negative open and gap down in equity indexes. The S&P actually stabilized and almost made it back to break-even before buckling to more selling which then intensified in the afternoon as the market was bothered by the lack of progress in the Greek negotiations.
So where does this leave us? The S&P has quickly gone from overbought to nearly to oversold. We are entering areas of support that have signaled buying opportunities during this range bound market. Since the trading range began in late December, moves to the lower bollinger band on oversold readings coupled with a rising VIX have served as a nice area of support. Buying this level has been the trade of choice in this choppy sideways range. With the bollinger band range the lowest in 8.5 months, we will get a range expansion at some point. Now which direction the breakout occurs is anyone's guess and we prefer to wait for price confirmation before getting more confident in either direction.
Tomorrow's employment report should offer up some more pre-market volatility and we'll see how equities respond after the opening bell.
We'll leave with this timely tweet from Charlie Bilello, CMT