After the euphoric move over the last couple of weeks, the market was overbought and ready for some sort of pullback. Routine profit-taking turned into panic selling as worries about European sovereign debt popped up again. We are again oversold, but there is almost a unanimous call that this dip is buyable. I like the jumpy VIX but thought the momentum large cap stocks can pull back a bit more. We are probably very close to another bottom, but a bit more work on the downside would not surprise.
We also have the FOMC minutes and Bernanke in front of the Congress by mid-week which could be a bullish catalyst. But this news out of Europe, like our jobs report on Friday, is unquestionably negative and we have to continue to keep a close eye on the situation.
