Good morning traders. Today’s comments are from Adam Grimes at The Macro Report.

Two days ago, we wrote: “Be aware that [global equity] markets are somewhat to extremely overbought, and though this makes them vulnerable to potentially sharp corrections, these corrections should be viewed as opportunities to add to longs. “ We believe that yesterday’s rather sharp selloff was probably driven, in large part, by a ―feedback loop‖ between Metals and Mining Stocks, the broad market, and the Metals-related ETF products. (More on this in the section on metals.)

Overbought markets behave like a house of cards—the slightest push is often enough to cause a reaction out of all proportion to the initial stimulus, but it is vitally important to keep today’s action in context of the big picture.
That context is, clearly, that the market is in at least an intermediate term uptrend, or (if you want the media soundbite) a bull market. It would be extremely unusual for the market to have topped at these prices, never to return. It is far more likely that this weakness is simply a pullback and consolidation in the uptrend, and traders holding broad index positions should not exit into this weakness. Of course, anything is possible, and we will be closely monitoring price action over the next few days for signs that our bullish call is now wrong. To be clear, we see no signs of that in yesterday’s action, and for now the uptrend appears to be robust and fully intact.