Investors Remain “Worried” About Interest Rates

The markets started the day on the downside and finished with a valiant attempt to make it to positive on the day. The technology stocks continued to be the main drain on the market as investors exited higher risk assets under the assumption that higher interest rates from the Fed would hurt stocks going forward. Interest rates joined the party adding to the year on the ten-year bond, now at 2.41%. It is not pretty when news is in control and we see again today how that played out from the opening bell to the closing bell how the news pushed the market on both side throughout the day.

As we stated this morning… one issue hanging over the market was an accelerated sell off from investors as the fear factor rose. NDX, NASDAQ 100 index fell to 4392 early and closed near 4438. That held support, but left the question of is it done lingering in the minds of investors. The 3.5% swing from top of May 27th to the low today maybe all that we get for now. This is something to watch as money did flow into the buy side off the low intraday. The Dow moved lower early as well testing the next level of support, but managed to work into the green before the end of the day.

We continue to watch the key movement in technology with semiconductors testing the next level of support and find buyers, SOCL, FDN, IGV and IGN all tested lower and bounced on the day. This is one of the leaders and needs to find support if the upside is to remain in play short term. Oil bounced on Monday off support near the $57 level and continued today with a move back above the $60 mark and up more than 3%. Energy stocks are still not responding to the move with the sector up only 0.3% on they day. The banks continue to gain traction on interest rates rising. This remains one of the benefactors from the higher interest rates and is one of the primary leaders now.

In the written notes posted below we cover many of the things we were looking at starting the trading day and what happened relative to our beliefs is where we continue to focus. The bounce off the low was just that for now. It could start a reversal again off the key support levels, but that is still to be validated as we move forward. The issues around the dollar, interest rates, Greece, transports, oil and China are all still very much in play. We will cover more on this in the morning research notes tomorrow. Make sure to catch up on those each morning.

Some notes from this morning for your review and insight. Click the link below to see the attached scan.

Jims Notes June 9th