Waffling start to the day… and throughout the day… but, we did manage to close higher! As I stated my post yesterday on telling the future… it is a losing proposition… I am just waiting for the trend to begin. Anything else at this point is a flip of the coin. Look at the chart below on the S&P 500 index intraday… to me it puts the emotions and lack of clarity in perspective currently.
Unless you are a day trader beating your head against the wall isn’t worth the headache. Focus on what you know, practice discipline and keep going forward. The consolidation pattern forming on the indexes showing the lack of clarity and investors/traders are working out their beliefs near term. until there is a catalyst in place to establish a trend this is likely to continue. Take a vacation.
The ten sectors of the S&P 500 index all remain in a downtrend. Healthcare was upside leader on Thursday and telecom was the leader on the downside. Neither did anything to change the chart. Telecom was in position to break higher, but failed to follow through and remained in the pattern. Healthcare bounced back some for the selling on Wednesday, but equally remained in the trading range. There is little to hang our hat on currently and it is steady as we go looking for the trade-able opportunities as they unfold.
The seven assets classes are trending lower as well with the dollar moving sideways. The emerging markets (EEM) have been attempting to break from the bottom consolidation, but the day to day activity is keeping pattern or consolidation in place. A move above $33.90 would be a positive to the sector near term. The EAFE index (EFA) likewise attempted to move higher, but needs some momentum to push through the near term resistance. Still too much uncertainty to claim any leadership at this point.
The volatility index attempted to move again on Thursday, but held above 24 level to keep the index elevated and reflecting the uncertainty in the markets. VXX is still alive and well, but if the clarity picks up SVXY will be the trade of choice as volatility evaporates. No clarity and plenty of intraday volatility currently.
The ten year treasury bond yield settled at 2.22% level on Thursday as bonds have sold lower on expectation of a rate hike again. This is shifting again relative to belief of the Fed hiking rates at the next FOMC meeting. You can see in the yield movement everything is still up in the air and speculation remains… Don’t bet against the Fed to hike rates.
Crude oil was up 3.4% on the close with the price back near the $46 mark again. The question mark is sustainability of price in relationship to demand? I am still cautious about any upside attempt at this point and I am more than willing to be patient until there is a catalyst or definitive trend in place. One day at a time. Looking for OIL to test the $8 level of support.
The continued challenge of interest rates and the Fed will remain in place as we move toward the FOMC meeting. Be patient and let the direction unfold before jumping to any conclusions. China is still a challenge despite the comments about currency and putting stimulus on the table again. Emerging markets are gaining as China moves off the lows. I like the bottom process, but it will need to establish a buying opportunity. As said, patience is still the name of the game.