A pop at the open was quickly erased as sellers rushed into the market pushing to the lows of the session. Case-Shiller home prices showed some decent gains helping ease some of the premarket selling in futures. The selling came fast and furious, but in this market’s fashion was quickly dispelled as panic buying set in. Unfortunately for AAPL the same buying did not make its way into the stock. On the flip side, MSFT was able to garner support and continue to push higher after releasing earnings last week. While the intraday support was nice to see the inability for the NASDAQ to hang onto breakeven is somewhat telling. While not a fatal blow we do have some blemishes in this market. A sound risk management process must be in your repertoire to avoid large losses.
This market is not going to make it easy on anyone. Just as the 10am hour it appeared this market was going to crater hard. However, just as quickly the market fell buyers were able to rush in and erase all the damage from the morning selling. The rebound was impressive for the SPY and IWM, but unfortunately the QQQ was held back by FB and AAPL. Both stocks broke lower with AAPL unable to hold its gains after reporting impressive earnings. The question is now is AAPL too big to support its current growth rate? Carl Icahn believes most have no clue and the stock should be much higher than it is today. Perhaps a Trillion dollar company? At the moment, this market does not believe so. Big blemishes on these two big stocks is throwing caution to the wind.
Tomorrow at 2pm we will get the Federal Reserve release its policy statement. Look for hysterics to follow from HFT and day traders thinking they can capitalize on nonsense following the release. There is still quite a bit of chatter the Fed could raise rates sometime this year. For those living off interest income a raise in interest rates would be a welcomed sign. It would also stop the wave of buy backs and actually drive capital to productive means. However, we all know the Federal Reserve is boxed into a corner and they will likely be unable to raise interest rates. Time will tell, but do not hold your breathe.
Stick with price signals and adjust position sizing accordingly. Exits (stops) are just as important to avoid major losses.
Aloha
