The market received an early boost from AAPL and YHOO, but it would not last long. All eyes were on the Federal Reserve and its policy statement. Many were expecting the normal dovish Fed waiting on raising interest rates. However, the Federal Reserve turned hawkish and the stock market did not appreciate it. Volume jumped day-over-day as institutions were rushing to sell stock. The massive volume and large price declines has the market just above recent support. Today’s session has changed a few things and if we break current support could usher in selling like we saw in October of 2013. Avoid being a hero in this market. Cut your losses and move on.
Aside from the hawkish Fed earnings continue to pour and they are not as positive as many were not expecting. Many firms are citing issues with currency risks among a slowing economy. Earnings from energy are going to be down and yet other sectors cannot make up the difference. MSFT and CAT started and today we saw QCOM get hit as well. When earnings season kicked off financials did not report good news either and now they are looking exceptionally weak. BAC, JPM, GS, and C all are below their respective 200 day moving averages. MS sits just above its 200 day. Not a sign of strength when the biggest banks are in a position of weakness. If we are to move higher financials will need to make a move higher despite their weak earnings. Earnings season continues to be a significant disappointment and we need to see this turn if we are to push into new highs.
We have the end of the month coming up and it will be interesting to see if we get some end-of-the-month window dressing. It will take a bit more than window dressing to help save this market from further downside.
What we want to avoid here is back-to-back days of heavy volume selling. If we do sell down further the exits will very crowded. Many have bought the dip near the recent lows and have a stop just below. The weakness recently has triggered a few hedges we are putting on tomorrow morning. Make sure you go here to register to become a member.
This market is on shaky ground. It is not the time to be a hero.
