Monday Sell Off

At its worst moment on Monday stocks were down -5.9% on the year. That is not even enough to qualify as a correction which has a -10% minimum.

Finding Bottom

Here are the 3 keys for finding the bottom of this move:

1) US Economic Data Stays Aloft: More showings like the ISM Mfg on Monday and too many investors will wonder if we are heading towards a contraction. We need to see that report as an anomaly. ISM Services today and January Employment data on Friday are the most vital right now to show the US economy is still on a positive track.

2) Global Currency Problems Diminish: Tuesday provided some signs of improv ement in markets like Turkey and South Africa. We need these situations to improve and, most certainly, not spread to more countries.

3) Treasury Rates Stay Low: The lower they are, the more attractive stock valuations become (which was the main reason behind the massive gains of 2013). In general, the 10 year Treasury below 3% is good news for stocks. And right now we are at 2.6%.

January was Bad

The S&P 500, which was supposed to go up, up, up this month, dropped 3.6% in January, its worst month since May 2012 and the worst January since 2010. The Dow Jones Industrial Average, meanwhile, fell 5.3%, its worst month since May 2012 and the worst January since 2009.

The reason for the market weakness, as we all know by now, has little to do with earnings, which have been OK, or economic data, which has been, well, OK, and everything to do with emerging markets, which have most definitely not been OK

What do the Economic Reports reveal about the state of the economy?

The labor market ended 2013 on a roll, with businesses continuing a several-month streak of solid payroll gains by adding 238,000 jobs in December, payroll processor ADP said Wednesday.

The economy lately seems to have shifted into a higher gear, with the labor market, manufacturing, retail sales and housing performing better than anticipated. Employers added an average 204,000 jobs a month from August through November.

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