And so the up and down movement begins. I feel like I have run a marathon this week and ended up where I started. At least the running gave me some exercise the market has just given me a headache. I love transitional periods… it is better to play golf and come back when it is over. Friday the S&P 500 index closed at 1790 and today it closed at 1794. However, the journey the last four days has been an emotional rollercoaster for investors. The worries over the emerging markets, the Fed stimulus cuts, the economy and earnings have kept everything focused on uncertainty and lack of clarity going forward. Until this settles we will continue to deal with the ups and downs.
Earnings were the driver on Thursday as Facebook and Qualcomm provide some positive news and guidance for investors to step back into the markets. There are still plenty of worries to go around, be patient and let this story unfold one day at a time. Today was positive to hold support again.
With that in mind what did we learn today that was worthy of our attention? The major indexes have been our focus this week as they test key levels of support. Earnings. Economic data and volatility round out the drivers for the market overall.
- S&P 500 index tested below the support at 1775 and bounced again back to 1794 on the day. With four days of up and down the index may be content to trade within the current levels. The next support would be 1745 and resistance at 1810. Index volatility has picked up as well with the VIX index hitting an intraday high of 19 and test back towards the 15 level would show the anxiety is dropping and a bounce may follow. The index made it to 16.6 today as start in that direction. The spike that started on Thursday of last week is not over yet. Flip of the coin on direction currently and daily.
- The NASDAQ index gained 70 points to close at 4122 and back near the Monday open. The index has been extremely volatile on the week with the technology sector is leading the downside along with semiconductors. 4000 is the next level of support and 4135 resistance. Watching to see how this plays out day to day. The technology sector produced a solid bounce on earnings today gaining 1.25%. Internet (FDN) was up 3.4% to lead the index higher.
- Russell 2000 Small Cap index held 1120 support again after a bounce back to the 1135 mark on Thursday. The close was back above the trendline off the November 2012 low. That was a positive and we have to watch to see how it plays our from here. The 30 DMA would be a good target to clear on the upside as breathing room for the index.
- Europe (IEV) bounced 1% on Tuesday and reversed on Wednesday, held on Thursday with not big changes. Not what many expected with the positive economic data in Germany and the eurozone over the last week. We would need to move back above $46.52 to hold the uptrend currently. $45 is the next level of support to watch.
- Amazon disappoints on earnings after-hours to put the pressure back on the large cap stocks. It trading down 8% and not looking good despite the positive outlook for payment processing and other opportunities for the company. Margins were less than expected and the miss wasn’t even close. Google on the opposite side was positive with the stock up 1% after-hours, following a gain of 2.5% on the trading day. Again earnings are hit and miss, but overall disappointing.
- Bond yields continue to drop and push bond prices higher. If the economic picture is positive and the Fed is cutting stimulus… should rates be ticking higher? This may be telling us that something is wrong with the Feds view or investors are too worried about the future. Either way this is another indicator for the worriers to watch.
Hang on for the ride as this continues to play out day-by-day. It is easy to want to jump on one side another rather to the outcome of the current volatility. The market will spell it out very clearly in time. The challenge is having the patience to let do so. Remain disciplined and focused on the objective. This is becoming a short term trading market don’t expect it to be easy. Golf, tennis, travel, hiking, exercising, etc. they offer less stress, more enjoyment and happiness than beating your head against the market… just saying sometimes a break is better than being broken.