We are in a market that really does not want to give up its gains even though stocks are overpriced and overbought.

The excuse for the selloff the past few days has been poor economic data, and the deteriorating situation in Iraq which should come as no surprise to anyone.  In spite of this, complacency remains high, yes the VIX did spike up 8.3%, but it is still trading near historical lows. On the surface, the percentage losses and red candles looked ominous yesterday, but in the NASDAQ Composite declining stocks did not beat advancing stocks by a 2 to 1 margin. It was close, but in a major market break, we would see declining issues surpassing advancing issues by a wide margin.

The gap was filled on the NASDAQ chart yesterday, but at the end of the day, buyers stepped in to regain nearly 1/3 of the daily losses in the index as it closed at 29.9% of its daily range.  There was no panic on volume that was up 7.08% above its 21 DMA.  Speaking of volume, there is an article on Bloomberg’s website this morning about the number of trades being executed by dark pools which is having an effect on market liquidity.  It is worth a read at http://www.bloomberg.com/news/2014-06-12/off-exchange-stock-trading-reaches-two-year-high-in-u-s-.html   “Shares changing hands in dark pools accounted for 40.4 percent of total share volume on June 10, according to data compiled by Bloomberg.”

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