Stocks Bounce, But Rally Is Short-Lived Following MLK Holiday

Oddly buoyed by bad data out of China (missed GDP estimates at 6.9%), stocks made a half-hearted attempt to stem some of the losses it took in the first two weeks of the year, rising by about one percent across the three major indices early, but the rally could not find its legs and sellers soon took over, sending the NASDAQ into negative territory for the ninth time in 11 sessions this year.

While there's still eight trading days remaining in the month, the January Barometer merits mention at this juncture if only because the month, as a whole, seems to be lost.

Readers will be reminded that the January Barometer - which posits that "as goes January, so goes the year" - has a roughly 90% correlation. The only question now for traders seems to be not whether the year of 2016 will be a bad one, but just how bad it will end.

Indications continue to suggest that the correction is far from over and the potential of an outright bear market is only being kept off the table due to some select large cap stocks. 65% of stocks on the S&P 500 are already in a bear market, i.e., off 20% or more, and the Russell 2000 is down more than 20% from previous highs.

Equities may have gotten a one-day reprieve from some non-committal buyers of the dip, but that strategy seems to have worn out its welcome. Seasoned traders are becoming more and more risk-averse, seeking the safety of large caps with steady dividends, strong balance sheets (there aren't many), and, as the 10-year-note is telling us quite plainly, fixed income investments.

Today's volatility included a 270-point round trip for the Dow, which was down more than 100 points midday. Wednesday may prove more challenging as markets approach the traditional options expiry on the third Friday of the month, at the end of the current week.

Today's Closing Quotes:
S&P 500: 1,881.33, +1.00 (0.05%)
Dow: 16,016.02, +27.94 (0.17%)
NASADAQ: 4,476.95, -11.47 (0.26%)

Crude Oil 28.59 -2.82% Gold 1,090.70 +0.01% EUR/USD 1.0908 +0.17% 10-Yr Bond 2.0350 +0.10% Corn 368.50 +1.45% Copper 1.97 +1.11% Silver 14.07 +1.29% Natural Gas 2.08 -0.76% Russell 2000 994.87 -1.28% VIX 26.05 -3.59% BATS 1000 20,041.25 -0.13% GBP/USD 1.4160 -0.66% USD/JPY 117.6320 +0.18%