Today we have a a lot of negative data. The Empire manufacturing survey went negative which means contraction in manufacturing in the New York region. So far we have seen evidence of slowdown not contraction. Industrial capacity utilization also dropped from 76.9% to 76.7%. A housing market index based on survey of home builders fell from 16 to 13. There are also fresh worries about Greek default as the CDS for Greece keep getting more expensive. The market opened with a big gap down but so far hasn’t sold of further since the open, which is sort of encouraging that long term investors might be finding value in the market.
At this stage I am pretty ambivalent about short term market direction. We have had negative data for the last 1-2 months but the market is also down 7%-8% from the peak, so the negative data may already be priced in. With the European worries rearing their ugly head again, we will probably see an increase in volatility and large overnight moves.