Another Up and Down Day With Big Swings

The hope was for a normal trading day, but then that was wishful thinking as the index looked similar to Monday with the intraday volatility showing more than 1% swings down and then up on many sectors. The chart below shows the S&P 500 index on an intraday basis for the last two days on a five minute chart. The early climb was from positive earnings and some positive economic data, the decline was the Russia/Ukraine conflict heating up again, and the rise off the low was the positive bounce from oversold conditions. The lack of direction and volatility is not what many want or want to stomach, but it is part of finding direction short term for the market overall.

SP500

Earning continued this morning with Northern Trust missing earnings and falling 2.6% on the day. Schwab beat expectations and rose 3.2%. Coke posted positive numbers as well and gained 3.7%. Johnson & Johnson beat expectations as well and gained 2.1%. That shows the bar set for those who beat and those who miss earnings.

Tonight Intel posted positive result that were lower that quarter-over-quarter results, but were better than feared by analyst. The stock is trading higher after-hours. Yahoo beat expectations and is trading up 7% after-hours as well. Tech is getting a boost from the data tonight and that could help to start tomorrows trading day. If XLK can move above the $35.75 resistance could produce a bounce. It is worth watching tech and taking what the market has to offer tomorrow.

Empire state manufacturing data was disappointing today and didn’t help matter early. The homebuilders sentiment was worse than expected and the CPI was hotter than estimates at +0.2% on both the top line and core. This is not helping the confidence factor looking forward. Investors need to see an improving economic picture as the stimulus cuts and rate hikes loom from the Fed. Part of the anxiety from the Fed is the need for clarity on the economy. Until we have that the yo-yo effect we have experienced of late may well continue.

Scanning today’s results relative to the sectors, the leadership from Energy continues to be worth our attention. SPDR Energy ETF (XLE) tested support after breaking above resistance at $88.50. Today it followed through on the upside after completing the reverse head and shoulders pattern. The chart below shows the test and move higher today. Digging into the sector shows oil services, exploration and production stocks all moving up to assist in the push.

XLE

 

Utilities (XLU) added to the upside trend today with a solid gain of 1.3%. This remains a leader along with consumer staples and energy above. All are defensive sectors and should be leading under the current environment. Adding to the upside today as well was REITs (IYR) up 1.1% as another defensive sector.

Overall the market continues to look for direction in the short term trend. The major indexes held their respective support levels again today and tomorrow we will watch to see how the current moves unfold. A bounce off the oversold conditions technically is the call in the headlines, but without something act as a lasting catalyst it will be nothing more than a bounce and then another test lower. It is up to earnings as the economic data isn’t doing much to instill confidence. The geopolitical issues in Russia are not over as we have warned and if the conflict rises to war status, the markets will react short term. One day at a time is all we can do for now and let the anxieties unfold.