We’ve come up against another rare bout of weakness in the U.S. stock market this afternoon.
The market has been heading lower basically all day, and is currently trading down 0.6%.
Stifel Nicolaus Head of ETF Trading and Strategy Dave Lutz flags three reasons stocks may be selling off today:
- More bad news out of Japan. Lutz points out that Nikkei futures are down about 1% right now from today’s close, and highlights the following from a Japanese press report: “Speculation is growing that the Bank of Japan will soon be left with no room to buy real estate investment trusts, a practice the central bank started in December 2010 as part of monetary easing measures.”
- Technical levels. Lutz notes that the Russell 2000 index fell below its 20-day moving average, “setting off quant programs to sell stock and buy hedging.”
- Credit default swaps. “There is some focus going around on [investment grade] CDS – CDX IG went from 76.81 to 83.75 today – a huge move,” says Lutz. “JeffCo has a note out highlighting the LACK of protection for sale.”
We could see the end of the market’s hot Tuesday streak today. It’s been up on Tuesdays for the last 20 weeks in a row.
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