The first of the big three events from yesterday included the E.C.B. leaving rates unchanged with no mention of “downside risks”. They also said that there would be no further interest rate cuts and that ongoing low inflation means that more stimulus measures could be enacted. The second of the three events was the eagerly awaited Comey testimony to the Senate. He ended up calling the President a “liar” several times. The final installment of the trifecta news events, the British Parliamentary elections, became a big surprise as the Conservative government failed to gather a majority. So, they had to form a coalition leadership with called for Prime Minister Theresa May to step down. This led to a sharp decline in the value of the British Pound.

Today, the DOW raced out to a 113 point gain at 11 AM. The S&P 500 was up to 2445 and the NASDAQ was lagging with a gain of only 12 to a new record high of 6341. At the same time, the VIX reached a ridiculous level of 9.37…nearly the lowest in history. However, the markets then began to roll over as the high-flying technology stocks were taking a beating. Most of the leaders have reversed sharply now to the downside after making further new highs, i.e. NVDA and TSLA.

The dramatic downside reversal this afternoon for the NASDAQ shows this index currently down by 116 points with about 90 minutes left in the session. The DOW is still higher by 40 and the S&P 500 is down 5. The energy stocks and financials have been stabilizing this week and have rotated sharply higher. Even laggards such as PFE are doing better for a change. 

The VIX has reversed course since this morning and is now up 8% to 10.95. 

I will have more perspective on the dramatic turn of events in greater detail in Monday’s notes when the dust settles. Currently, bond yields are higher with the 10-year Treasury Note at 2.21% on the stronger financial stocks…probably in anticipation of the Fed raising rates on Wednesday. Crude oil is steadying at $45.79 a barrel, gold is lower again on the stronger dollar at $1,271 an ounce and the Euro is down to 1.1192.

Donald M. Selkin

These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning.  The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report.  This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities.  This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm.  This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author.  These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.