Summer is here?!

CNN Money website reported the following in their market wrap.

• The Dow Jones industrial average (down 198.94 to 13,266.73 ) tumbled nearly 200 points, or about 1.5 percent, bringing its three-day loss to 413 points, or about 3 percent.
  
  The broader S&P 500 index (down 26.66 to 1,490.72) sank nearly 1.8 percent, or 3.2 percent for the three-day period. The tech-driven Nasdaq composite (down 45.80 to 2,541.38) fell around 1.8 percent Thursday and has lost roughly 3 percent for the three days.

So summer is here?

• "This is the summer correction everyone's been looking for," said Tim Hartzell, CIO, Kanaly Trust Company.
  
  He was referring to expectations on Wall Street that the rally was due for a bit of a pullback - and the seasonal tendency for summer to bring sub-par stock returns, due to low trading volume and more volatility.
  
  Hartzell said the rally had been vulnerable to this kind of a retreat in mid-May, but then got recharged by "the speeding car that is private equity." He said that after the summer, he still expects to see the classic fourth-quarter stock market run-up.

Remember yesterday posting about FSO market commentator, Chris Puplava making the following comment about the US Interest Rates issue? Hence, its not surprising at all to read Mr.Bond master, Bill Gross making the following comments.

• Legendary bond investor Bill Gross expects strong economic growth worldwide to push up global interest rates and put a damper on the Treasury market.
  A long time bond market bull, the PIMCO manager says he's now a "bear market manager" and has raised his forecast range for the benchmark 10-year U.S. yield to 4 percent to 6.5 percent. That's up from last year's forecast range of 4 percent to 5.5 percent. (click here for the rest of the article at cnn)

And Mr.Gary Dorsch, FSO new market commentator makes the following commentary, Bank of Japan Signals Summer Rate Hike.

• The Bank of Japan has kept global bond yields depressed with its super easy money policy. But in this latest episode, it was the ECB’s rate hike campaign that initially led the German bund yield to break-out above its Inflection point, followed by higher Aussie, US Treasury, and finally higher Japanese bond yields. If Japanese and US T-Note yields move above their August 2006 highs, it could signal a major upsurge in long-term global bond yields, wreaking havoc on stock markets.

So what is this divergence all about between the Global Bond and the Stock Markets? Mr. Dorsch has an excellent commentary here.

Blogger Kirk sums it up nicely.

• That was an ugly day. They bulls tried their best to rally us in the final hour but that effort fell dead flat. Increased volume, technical breakdowns, and the failure to rally not far from the lows were not comforting. ( Click here )

Trader Mike has a more detailed write-up here. Do give it a read. I would like to highlight the section of the Worden report, he highlighted.

• Yesterday was a bad day. Today was far, far worse. Every one of the Important Averages was down more than one percent. In fact, only one was down less than 1.5% — namely, the Dow, which was down 1.48%. All of the breadth groupings were overwhelmed in a deluge of declines. As an example, the Dow had zero advances. Only 47 Russell-3000 stocks rose at least half a point, while 1304 fell over half a point.
  
  The SP-500 is the weakest of the Majors. It was down 1.76% today. As of yesterday, it is no longer trading in new-high territory. It’s well below the 2000 closing high. The Dow is at least still in new high territory. It took out the 2000 high (11,722.98) last year (I think it was October). As I’m sure most of you remember, the Nasdaq Brothers have never come close to all-time highs in this bull market.
  
  The leading Price-Volume relationship in the Russell-3000 was Price-Down with Volume-UP (1725 stocks). Second was Price-Down with Volume-Down (874 of them). In total, only 242 stocks rose.
  
  There’s really only one practical question you can ask at a juncture like this. Could the market tumble this fast with volume increasing at this pace without being oversold? Yes, it could. A market can never be so oversold that it can’t become more oversold. But common sense tells us that we are probably not too far from an oversold bounce. But what good does knowing that do you? Are you really thinking of plunging into a conflagration like this? Smart investors spend most of the time waiting.

And finally Dr.Brett raises the following issue Are Rising Interest Rates Taking a Toll on the Stock Market?

• Rates have risen from a low of approximately 4.6% to the current 5% over the past 20 trading sessions. I note that, as of Wednesday, only 434 stocks across the NYSE, NASDAQ, and ASE were making 20 day highs against 1001 new lows. My Demand indicator stands at 23 vs. 165 for Supply. That tells us that stocks with significant downside momentum (those closing below their short- and intermediate-term moving averages) outnumber those with significant upside momentum by about 7:1. It does appear that the rising rates are taking a toll on stocks.

So is summer here?