Liquidity is very thin

Stocks were lackluster and credit spreads gave back most of Tuesday's gains with benchmark bank and financial bonds closing 5-10 basis points wider.
Liquidity is very thin and so credit spreads will move with ease in either direction.
Conviction, a core belief in market direction, is hard to come by.
Hedge funds and other investment vehicles that get paid to take risk are standing pat on the sidelines, unwilling (or unable) to take risk.
Last year saw a lot of the smaller funds with assets under $100 million get washed away by the market turmoil.
The larger funds, although they suffered losses, still survived but are now loath to take outsized risks.
On the technology earnings front, Intel and IBM earnings were disappointing but Qualcomm's earnings surprised on the upside.
In financials earnings results have largely been in line with expectations to slightly better on capital markets rebounding and relative strength in the mortgage markets.
Trading revenues have been strong but they have not provided as big a boost as many investors had hoped.
Bank of America and Morgan Stanley both report earnings early on Thursday morning.
While Bank of America has outperformed relative to its peers with credit spreads tightening aggressively since the start of the year, both headline risk and a reduced emphasis on capital markets give investors pause.
Morgan Stanley's earnings are likely to be good on an operational basis but bond traders remain focused on rating agency Moody's potential 3 notch downgrade.
Initial jobless claims numbers are out on Thursday and players will also be watching Bank of America and Morgan Stanley's earnings.