We've come up against another rare bout of weakness in the U.S. stock market this afternoon.
The market has been heading lower basically all day, and is currently trading down 0.6%.
Stifel Nicolaus Head of ETF Trading and Strategy Dave Lutz flags three reasons stocks may be selling off today:
- More bad news out of Japan. Lutz points out that Nikkei futures are down about 1% right now from today's close, and highlights the following from a Japanese press report: " Speculation is growing that the Bank of Japan will soon be left with no room to buy real estate investment trusts, a practice the central bank started in December 2010 as part of monetary easing measures."
- Technical levels. Lutz notes that the Russell 2000 index fell below its 20-day moving average , "setting off quant programs to sell stock and buy hedging."
- Credit default swaps. "There is some focus going around on [investment grade] CDS - CDX IG went from 76.81 to 83.75 today - a huge move," says Lutz. "JeffCo has a note out highlighting the LACK of protection for sale."
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- Dave Lutz
- Bank of Japan