Major market averages rose on lower volume Friday. The number of distribution days along with the hard selloff in leading stocks implies this correction may have a bit further to go before a QE-induced floor is found. In addition, bond yields may rise due to surging labor costs and sharply declining first quarter productivity. U.S. futures are up this morning as Asian and European markets continue their recovery from Thursday's gap-down move.
Investors should keep their stops tight on remaining long positions. With earnings season upon us market volatility could increase. In addition, holding stocks into earnings without a sufficient profit cushion is tantamount to playing "earnings roulette." Earnings season typically sees a number of gap moves either up or down in leading stocks, which brings into play the potential for buyable gap-up moves that can be bought into if the general market is able to snap out of this current pullback.
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