The market experienced a very unusual day of mixed action to start the month of June.
Overnight futures were indicated sharply lower on concerns that trade wars would push economies around the world into recession, but the dip buyers showed up and most of the losses were recouped before the open.
Sellers made a renewed attempt but comments by Federal Reserve member James Bullard about the possibility of rate cuts helped to fuel a little more buying. Bonds continue to move higher in parabolic fashion and short-term rates are dropping even faster than long-term rates, which is relieving the inverted yield curve issue.
While breadth was positive and finished the day at 4,000 gainers to 3,250 decliners, there was carnage in the Nasdaq 100 ETF (QQQ) , which finished the day with a jaw-dropping loss of 2.2%. The catalyst was headlines hitting the big well-known "FAANG" names. All of the FAANG stocks with the exception of Netflix (NFLX) saw headlines about investigations for anti-competitive practices.
The FAANG names have been "go to" favorites for so long the exits were very crowded as many big funds tried to flee. It was a hedge fund hell as many of the standard trades, such as long FAANGs and short bonds, ran in reverse. The trades that were automatic no longer were so simple Monday as the FAANGs went bidless and bonds went parabolic.
With the exception of the large-cap technology stocks there was some signs of bottoming action. The market was sufficiently oversold for some sort of relief action, but there wasn't any convenient news excuse and the FAANG carnage hurt sentiment.
I expect to see something positive news on trade negotiations with Mexico soon that may provide some countertrend action. However, make no mistake, this is not a technically healthy market. Upside action should not be trusted to last for long at this point but that doesn't mean there won't be some.
Have a good evening. I'll see you Tuesday.