Market starts on the downside early and then reverses to solid gain for the day. Why? The answers are all over the headlines…. 🙂 just kidding. There really are more answers for the move today than you would care to read. Tonight I am putting up a video that you can view versus attempting to write all of the events to digest currently. We discussed many of these on the webinar last night, but now we have to update some of the story to incorporate the activity from the day. Below is a brief outline of what I discussed on the video.
1) The energy sector caught support near the $93 level on Monday, as we discussed, and today it followed through on the intraday reversal and held the move with resistance now at the $96.50 level, but it did clear the previous support at the $95 mark. The driver was crude moving back above the $95 mark on the day and up more than 2%. Natural gas was up 1.7% and gasoline was up only 0.8%. The activity is a oversold bounce, but the question is sustainability?
2) Biotech bounced 1.8% holding the support levels and keeping the uptrend off the April lows in play. Plenty of volatility in the sector the last couple of weeks, but this is one of the leaders in the upside. Bounce in play… sustainable?
3) All ten sectors of the S&P 500 index were in the green today with financials as the lowest performer up 0.4% and healthcare tops on the list up 1.3%. The index gained 0.8% and SPY closed at $200.60. and holding above our stop on the day.
4) NASDAQ broke 4548 support on Monday and recaptured that level today with a 0.8% gain and 4556 on the close. The intermediate term uptrend is still in play as well. Don’t count the growth stocks out yet, but again… is it sustainable.
5) Treasury yields were higher with the thirty-year bond at 3.35% and the ten-year bond at 2.59%. The move was slight and the bond has stalled into the announcement expected tomorrow from the FOMC meeting. Language is what all the fuss is about and the expectations are for clarity to hike rates sooner.
6) Technology sector rallied back to the top end of the previous range and all the part up 1-2% on the day. Social Media recapture half of the losses from Monday, but still plenty of challenge ahead.
7) Small caps were up 0.4% and disappointing versus the downside move on Monday. IWM closed at $114.44 and failed to recapture the $115 level. It did close at the 200 DMA, but the downside remains the bias from my view.
As we discussed on Monday, the growth sectors are getting pushed around on fear of the Fed. The Fed actions are still being speculated and no real conclusions currently and I don’t expect it to improve much tomorrow at the conclusion of the FOMC meeting. The language may change, but that will only invite more speculation on the time line for the actual event to take place. Focus on the challenges at hand and map your plans relative to your time horizon and objectives. Watch the video for more details on our outlook.