The Dallas Fed's Richard Fisher was also speaking midday, noting he had no qualms about seeing a little more market volatility.
Stocks were weaker going into the final two hours of trading...there was a sell-side imbalance in stock for sale at the close. There is also a quarterly rebalancing of the S&P 500 at the close, with some modest stock for sale with IBM (IBM), Cisco (CSCO), Express Scripts (ESRX), Illinois Tool Works (ITW), and Apple (AAPL), all of which are having their weightings reduced in the S&P 500 due to buybacks.
Bottom line: The most hated rally continues. The S&P 500 is up 1.3 percent for the week to date. However, many high beta stocks like Netflicks and some biotech stocks sold off hard and were replaced with buying in more stable consumer staples, utilities and old school tech stocks. In other words the smart money is still in the market but is turning decidedly cautious.
If you look at the S & P 500 you can see it is lagging lately and the TSI (True strength Indicator) at the top of the chart shows the lack luster interest.
The story looks better for the 50 day overbought, but notice the slope line is showing a shortage of momentum, could easily go the way of August.
High flying tech stocks are being abandoned as shows in the Nasdaq Summation Index.
Still lots of strength on the big board as the NYSE new High Low chart shows the bull continues
The VIX failed to complete its cycle lower showing there is fear returning in professional trading desks
Late in trading there was a general selling and it is reflected in a sudden drop in On Balance Volume- now a one day OBV drop is no reason to run scared but your antennas should be up.
Of course this is all reflected in the Aggressive defensive graph which is decidedly going in the direction of defensive. Notice the green slope line in a fall.
How to Play This
Well first off we are just 5 weeks until May when "Sell In May and Go Away" takes over. This year being where it is in the U.S. Presidential cycle and after such a run this could be a really good sell off. You must play the market the way it wants, be long pick only stocks that are strong. This is a great time to buy the DVY ETF and consumer stocks like P&G. This is not a time to bet on a high tech wiz bang high Beta stocks.