Stocks are weaker mid-morning on a disappointing Chicago PMI number, but there is at least an even chance that we will drift higher later in the day.
Bear in mind that:
1) Traders are aggressively short today for the first time in a while. I am told that the put/call ratio is 1.08, meaning that there are 1.08 puts taken out for every short. That is unusually high, it has been in the .7 area many times recently, meaning there were far more call (long) buyers than put (short) buyers. Should the market show signs of stabilizing or drifting upward, that could result in significant short covering late in the day.
2) The dollar is weaker, while oil and other commodities are higher.
3) Perhaps most importantly, it is the final day of the quarter, a quarter in which the S&P 500 has shown the greatest gains (15.3 percent) in nearly 11 years. There is a strong tendency to protect those gains.
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