Bulls came charging out of the gate Monday as the thinking over the weekend must have stimulated them to think the Fed would keep moving ahead with QE. Some pundits even suggested tapering would be a good thing since it would mean the economy is in full recovery. Frankly, it’s inappropriate to conclude anything at this point as the Fed hasn’t acted yet. There are more trial balloons floating overhead than what was witnessed on D-Day.
Economic data was helpful as the Empire State Survey climbed to 7.4 vs 0.5 expected, and prior -1.43. However, within the Survey, much of the data was weak, New Orders -6.69 vs -1.43; Shipments 11.77 vs -02; Number of Employees 0.0 vs 5.68; and, Average Workweek -11.29 vs -1.14. The Housing Market Index (See our ETF In Focus Video – ITB) came in strong at 52 vs 45 expected, and prior 42, which was the best reading in 7 years as homebuilder optimism grew.
It seems to me that bulls are a little too hasty to jump on stocks as we’ve seen consecutive trading days of 100-point up and down since last Wednesday.
Unless there’s other intervening news, it would be logical to assume Tuesday will be relatively quiet as would Wednesday morning.
We lightened up some long positions today on the early morning ramp higher. Maybe we’ll put them back on next Monday. Remember, aside from the Fed, its quad-witching Friday.
Monday afternoon stocks gave back nearly half their early gains. This drop was due to this Financial Times story that Fed tapering would begin. But buyers bid stocks back higher by those who have skin in the game.
Most of the buying focus was on tech (XLK) and bigger names in the DJIA (DIA) like CSCO for example. Bonds (TLT) were weaker. The dollar (UUP) was flat while gold (GLD) was weaker once again as investors push “risk on”.
This is a very short post and Tuesday I may not post at all as we await Wednesday’s Fed release.
Volume was lighter on the day but did see most volume on the two-way FT story. Breadth per the WSJ was positive.
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Aside from tweeting occasionally or making some notes on my FB page, we’ll see you again on Wednesday most likely.
Let’s see what happens.
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| Commodity | Quote | Change | Change % | NY |
| Gold | 1,379.90 | -5.80 | -0.42 % | 03:25 |
| WTI Crude Futr | 97.59 | -0.18 | -0.18 % | 02:54 |
| Index | Quotes | Change | Change % | Local |
| CRB | 286.26 | 0.08 | 0.03 % | 06/17 |
| US Dollar | 80.74 | -0.05 | -0.06 % | 00:46 |
| Index | Quotes | Change | Change % | Local |
| VIX | 16.80 | -0.35 | -2.04 % | 06/17 |
| MSCI | Value | Daily | MTD | YTD |
| Brazil | 2314.25 | 0.07 % | -7.96 % | -15.16 % |
| Russia | 714.95 | 1.59 % | -1.49 % | -11.46 % |
| India | 401.85 | 0.43 % | -4.64 % | -6.55 % |
| China | 55.77 | 0.92 % | -6.85 % | -11.26 % |
