Markets open higher, drift higher into the FOMC meeting and then jump only to be volatile on the press conference. The issue of interest rate hikes is nothing new it is just a market in denial over the reality of when it will truly begin. This is going to carry into today’s trading and we will have to deal with the renewed intraday volatility and interpretation of every word uttered by the Yellen and the twelve dwarfs (looks kind of like Snow White and the 12 or was it 7 Dwarfs) Let’s just leave our summary as it did nothing to clarify the uncertainty in investors minds or outlook. But, it did offer some buying for those willing to pay the bounce.
The ten-year bond bumped to 2.11% and up slightly off the lows. The movement to bonds is an indication that investors continue looking for safety or a hedge to their portfolios going forward. TMF or TLT are leading the way higher as a result of the decline. FOMC meeting Wednesday took some wind out of the sails, but there is still plenty of uncertainty to keep the bond in play.
The NASDAQ closed up points or 2.1% at 4643 . The upside fell short of the 4652 level to recapture the upside momentum, but it was good enough for everyone to take a deep breath and watch. Back above the 50 DMA and an inside bar to define if we can reverse the downward direction near term. The NASDAQ 100 index is still showing more weakness than the broad index thanks to the large cap stocks.
The S&P 500 index closed at 2012 and pivoting off the low from Tuesday. Does this mean the selling is over? Good start, but not conclusive by any means. It does validate the buyers wanting to put money to work into the year end period. Energy was the clear leader again today up 4%, basic materials, telecom, financials, healthcare and consumer discretionary were all up more than 2% on the day. Money for everyone. Leaders bounce back from the selling on Tuesday and the losers are bouncing off the lows.
As we discussed in the webinar on Tuesday night the rotation to the downside would need an event, catalyst or news to stem the downside and the FOMC was part of the reason, oil holding near $55 was part of the reason and Russia becoming proactive towards the ruble was part of the reason… The next question is sustainable or temporary? For now I am going with temporary backed by some hope that things will improve longer term, but hope is not a trading strategy, thus I am going with temporary and that leads me to short term windows versus longer term horizons.
The Russell 2000 index was up 2.6% leading the indexes higher and setting the bar for other to follow. We have discussed the move in this index the last two days showing signs of wanting to bounce and it did just that Wednesday. Back in the trading range and looking for follow through on the move today.
The Volatility index jumped to a high of 25.2 Tuesday and reversed to 20 on Wednesday. The swings are getting bigger and we want to see if the uncertainty is coming out of the market or if it is just hope in a better tomorrow from traders.
Dollar (UUP) is taking some heat from the market and broke the $23.35 level on Tuesday, but bounced back to $23.60 on Wednesday. The FOMC news helped as the threat of interest rates rising helped the buck.
Tomorrow will give some answers to the upside move today and if the buyers are ready to step in and make a push higher into the year-end. Taking one day at a time for now.