Yesterday, the averages managed to snap it’s 2 day losing streak, that knocked off about 2% of the year-to-date gains from the DOW, S&P and NASDAQ. Since Investors have been spoiled rotten by this market, that has simply refused to trade down since November, everyone, including myself, thought that since the averages closed above Tuesday’s lows at DOW 26,020, S&P 2818 and NASDAQ 7373, a rally on Wednesday, was a pretty good bet.
The day’s trading started off on the right foot. with a big earning’s boost from Boeing, that sent the DOW up over 250pts to test Resistance at 26,350 right out of the gate. The early spike in the DOW, also gave Traders incentive to Buy across the board, taking the S&P and NASDAQ back up to test Resistance at 2840 and 7460 respectively. The early rally lifted all boats, producing strong breadth figures, that had winners beating losers by a solid 2/1 margin, something that the recent rallies lacked, so early on, the markets seemed to be on the right path for a rebound. So after the big opening spike, the Indexes settled in within throwing distance of the highs and well away from Tuesday’s lows, to wait to hear from the FED at 2:00pm.
Well, the FED came out with no real surprises, but the Federal Open Market Committee, did seem to be a bit more concerned that with the U.S. Economy very strong and sustaining a Labor market, that was becoming tight, which would eventually push up wages and prices, leading to an Inflation Rate over the Fed’s target of 2%. Now with the magic word of a 2% Inflation Rate said, Bonds fell, the Yield on the benchmark 10 Yr rose to 2.76% and stocks fell with the S&P breaking Tuesday’s lows Support at 2818, while the DOW and NASDAQ came within a few points of their Supports at 26,020 and 7373. Fortunately, with the help of BA, the Indexes managed to close out a day, that should have been a lay up, with just minor gains. The takeaway from all this, is that the game is
changing for Investors and from now on, all Economic Data has to be factored in, because as Rates rise, Investors will realize that the “easy money” is now off the table.
Overnight the global markets traded mostly higher, but this morning, the DOW was up and is now down by about 40pts, while the S&P and NASDAQ futures are holding on to small gains. The Yield on the 10 Yr is off a tick to 2.74%, the Dollar is mixed and so are Commodities with Oil up a little and Gold down a little.
Today we have the Weekly Jobless Claims and Productivity numbers at 8:30, followed by the ISM Manufacturing and Construction reports at 10:00 and since everything is now important, pay attention.
Today’s Early Markets
DOW Futures— down 36.00 London – up 10.58
S&P – up 100 DAX – up 59.76
GOLD—$1345 Apr Nikkei — up 357.89
OIL— $65.00 Feb HangSeng — down 245.45
DOW RESISTANCE 26,350 S&P RESISTANCE 2840
DOW SUPPORT: 26,020 S&P SUPPORT: 2818
$NASDAQ RESISTANCE 7433
$NASDAQ SUPPORT 7373