Market Notes of Interest for Tuesday

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Key Index Today: S&P 500 Index
The move to 1705 today puts the index within five points of hitting a new high. As discussed yesterday, the leadership from financials and technology would help the upside extension. Both gained 0.5% on the day and remain in an uptrend off the August lows. The result of the FOMC meeting will likely be the determining factor to the direction short term for the broad index.

Down Interest of the Day: Crude Oil
$105.52 was the close, down 1% or $1.08. This is what we have discussed for several weeks relative to the price of crude being at a level that wasn’t sustainable based on the supply and demand outlook. The resolution of Syria near term is taking some of the speculation out of the commodity, but there are still near term concerns over Syrian compliance and follow through. Thus, our short term target for oil is $103.40 and if there is a follow through on the issue with Syria… $98 could be the next stop. Gasoline is already dropping in price, down 10.1% since the peak on August 28th. This is good for the consumer, but is also another sign that oil may soon be heading lower as well.

Stock of the Day: Apple
On Monday the price of Apple fell 3.2% to close at $450.12 as the news from China Telecom was they were cutting subsidies on the iPhone and that sent investors to the exit. Today the stock rose 1.1% to $455.32 on the hope that all the negative press was wrong about the outlook for the new iPhone sales and margins are better than many expect. Who is right? That is one that will get settled when we see the first quarterly results of the new phone in the market place. From my view either argument is pure speculation at this point and only time will tell. In this type of issue the negative bias or the sellers tend to have the upper hand.  Watch and see. $447.50 offers some support, but $420 is the next level of major support. $465 on the upside will be the key resistance to break above. **(A special mention on stock of the day to Facebook (up 6%) as it was added to the NASDAQ 100 index.)

Economic Reports:
Consumer price index (CPI) was up 0.1% and in line with expectations and keeps the inflation talk off the table for now. Home builders index was at 58 and light of expectations, but still positive for the sector. XHB was up 1% in trading and attempting to break above near term resistance at the $30.90 level. We have raise our stop on the position to adjust for the risk short term. Real median income was flat at $51,017. No change is indicative of the numbers we have seen over the last year in the reports. Many are still living in the dream that the economic data is bad enough to keep the Fed from starting the stimulus cuts at the current FOMC meeting that concludes tomorrow. All eyes will be on Mr. Bernanke and his comments relative to the cuts and how much, when, etc. This is going to be a balancing act for how the news is presented and broadcast. Promises to be interesting.

I would like to speculate on how this will pan out, but there isn’t enough conviction on my part in any one direction of how this will all unfold. That is keeping me conservative at this point and willing to adjust as needed once the news is out and we have a clear understanding relative to the impact. One day at a time with a conservative approach for now.