Equity market did exactly what I expected since last week.  I still have the same view as before. This pullback will be different from last few months, and it won't bounce back immediately after two or three days.  It's the start of 5% correction, and it may last two to three weeks.  My downside target for S&P 500 is around 2040, and it will probably get there earlier to mid June.  For slightly deeper correction, it's also possible for S&P 500 to reach 2000-2020 before the correction to be over.

About 100 points pullback means nothing for equity considering how high it went.  It's healthy for the market to have some correction and build the base for more upside. Otherwise it will go nowhere like last few months. So anyone bullish should really be happy to see more downside coming in next few weeks.

Bond prices have big rally with interest rates down following equity's selloff.  Rates has room to go down a little bit more from here. I am still neutral on it, and don't have strong view for the direction after that.

Equity bounces back from the sale-off earlier this month with both S&P 500 and Dow in new high. 

Last Tuesday's sale-off only last about 1 hour before everything rebound quickly.  I think earlier this month the market is oversold enough to lead to rally in short term.  Now the equity market quickly becomes overbought, with S&P 500  at 2130/2140, which is my original target, and it's also the area I will turn extremely cautious.  I still think the market will correct  about 5% to 2040/2050, possibly by the middle of June.  

 

For this week, I don't expect too much movement in either direction. S&P500 might be able to touch 2140 before turning down. Normally it stays at the top for several days with very narrow range. Possibly bigger downside will not happen until next week.  So July puts might be a better choice now.

I still think equity market will have more downside even with Friday's big rally following job reports.    
But this correction is not that deep, only 3% to 5%.  So downside for S&P 500 is around 2040-2050, that's only 50 -60 points away from Monday's close.  It's nothing meaningful compared to how high it went from last October's low.   But with almost half year's sideway action for equity, that's enough shakeout to build the base for strong uptrend in later summer to early Fall.

Bonds continue the sale-off after last Thursday and Friday's brief bounce.  In short term,  bond price can bounce again from here, which means rates will pullback a little bit.   For long term I am neutral on it, and wait to see how it develops.

Crude oil has been up after dropping to lower 40's.  I think the low around $42/barrel might be set for this crash.  I don't see it will go back to above $70 /barrel quickly. The most it can do is range bound between 50 to middle 60's.

Equity finally will have the long waited 5% correction at this time.  If you are quick you might be able to catch 30 points upside for S&P 500, but any bounce will be sold. I expect S&P 500 will pull back after the temporary bounce to 2030-2040 in next few weeks, and any pullback close to 2000 will be good enough shakeout for long term entry buying points.  This correction may last longer than a few weeks, possibly one month or two.  After that it will continue the uptrend.

Interest rates are up very quickly last few weeks, and this sale off in bonds is too extreme in short term.  I expect rates will come down a little bit next few days especially when equity undergoes some correction.

Equity has been in range bound last week with some pullback, and this pullback apparently is another buying opportunity.  I expect S&P 500 will finally break  out to the upside to 2140-2150 area. If it gets there, I will become more cautious then.

Russel 2000 has been underperform again last week. I think it will also try to bounce at this level, at least to 1250 area, and possibly back to 1270.

Bond sold off sharply last two weeks, and it's oversold short term. I think at least bond price can bounce a little bit for now.  I don't have any long term view on it.