Positive Economic Data Gives Market a Hand Up

Did the market give Yellen a rookie pass on her comments Wednesday after everyone discussed it overnight? Or, did the market just flip her off, after some speculated her comments were intentional towards a bubble market? My guess is neither cares and it is business as usual. Buy stocks and forget about the fundamental data. At least that is the way the market functioned today. Despite all the worries and issues surrounding stocks the motto of buy now and worry later still applies.

Yields on the 30 year bond moved down to 3.65% versus 3.67% on the close Wednesday. Some anxiety relief for the broad markets. High Yield bonds (HYG) bounce back from the selling on the news Wednesday. In fact, most bond instruments held up on the day, but there is still plenty of worry reflected in the bond sector overall. This is one sector to continue to watch as this all unfolds and direction is established.

I am sticking with my statement from earlier this week, regardless of what I believe to be true about the market, it is what the market does that matters. You can’t argue with the confusion created by the Fed, Russia, China, earnings or others, but you can be cautious about the risk it will create. On the other side you can bank on the buying this week to keep the uptrend in play. We can only take it one step at a time looking forward.

Moves worthy of NOTES:

S&P 500 index moved held above the 1850 level for now. 1874 did offer some resistance again on the day with the index holding most of the move versus selling off like Wednesday on the Fed comments. The leadership today came from the Telecom (IYZ) sector up 1.5%, Finanicals (XLF) and Technology (XLK) remains a leader as the index gained 0.9%. Semiconductors remained a leader for the sector with index closing up 1.7% on the day as well. Networking (IGN) was positive again today up 1.2% and is establishing itself as a leader hitting a new high. We still have to keep our risk management hat on as we have put money to work in the S&P 500 Model. 

Financials woke up today gaining 1.4% and back to the previous high. Banks (KBE) started the rally gaining 1.8% as the existing home sales numbers were positive to the lending side of the ledger. KBE hit a new high on the day and is looking positive on the break higher. Regional banks (KRE) were up 1.9% and hit a new high as well on the day. This is a sector that if the leadership tag sticks will help push the broad index higher short term.

Healthcare remains a leader and Providers (IHF) was up 0.6% to add to the upside breakout and follow through. Drugs (IHE) and biotech (IBB) were lower and have been working against the trend. Watching them to see if the downside gains control short term. Overall still a leading sector, but we have to manage the downside risk should the losers accelerate.

Global markets (EFA) respond with a thud to the Fed, down 1.5% on Wednesday. I opened lower today trading lower by nearly 1%. Managed to regain half of those losses, but still closed lower on the day. Europe was down 1.5% as well on Wednesday, but ended in positive territory today. The emerging markets (EEM) were down 2% on Wednesday and closed slightly in the green today. So much for the global rally, at least for now. Russia was off 3.1% again today or off more than 6% the last two trading days as the lack of confidence over the Ukraine remains in play.

I discussed in the weekly update on Saturday that the lack of clarity remained an issue, and that we would be better off to play golf, tennis, travel, or just about anything other than watch the financial markets. This week has certainly played out that way so far. The emotions and concerns about what is going to take place going forward in the markets as well as global economics, are one big question mark and investors don’t like uncertainty coupled with a lack of clarity relative to economic growth short term. Practice patience for now and go have some fun versus beating your head against the market.