A wild ride for stocks today as indexes erased more than 1% in losses only to close lower on big volume. The VIX closed higher above its 50 day and 200 day moving average. At 2pm at the release of the latest FOMC meeting minutes it appeared stocks had set a bottom and were ready to blast off. Sellers had a different idea. While we were able to close off the lows weakness continues to be a point of contention for thsi market. Despite earlier this week’s positive price movement we simply cannot push higher. Weakness continues to prevail and this market remains on very shaky ground.
We remain very cautious with this market. The fact that we can erase more than 1% in losses we can’t even close near the highs. In addition, we close in very weak fashion. Nothing about this market says strength other than hopes of QE4. TLT and XLU are trading as if the Fed is not about to raise rates any time soon as investors are playing defense. What would this market look like if bonds sell off if in September the FOMC decides to inch rates higher? TLT and XLU simply are not trading as if the Fed will raise rates. How bad is the economy?
We know commodities are hanging near multi-year lows. How can the economy be doing well if commodity prices continue to hit new lows. There is an oversupply of Crude Oil, but why is something like copper at multi-year lows? You would think we’d see stability in prices rather than free-falling prices. All very interesting. Price action continues to point to weakness across the board. The reason will come later.
The only index left standing is QQQ. DIA, SPY, and IWM all look weak. DIA and IWM have already rolled over and SPY looks to be joining the party soon. Wherever thsi market wants to take us we’ll follow. At the moment, we continue to see weakness and remain cautious.
More fun tomorrow.
