Once again small cap stocks had a tough day as the Russell 2000 was down more than 1.2% on the session. The big cap indexes saw small losses in heavier turnover. Over the past few sessions after the earnings from GOOGL, AMZN, and MSFT small cap stocks have lagged well behind the NASDAQ 100. For now, it is all about large cap technology stocks. PCLN broke out yesterday and we continue to see the NASDAQ outperform the broader market. It does appear the market is waiting upon the Federal Reserve on Wednesday. Bond yields continue to trade in a tight range. Where will rates be after tomorrow? So far, the past two days have been pretty good consolidation days. If this market wants to push higher we will need to see small caps make up some ground. Tomorrow should be an exciting day.
The World Series begins tonight with the Mets facing the Kansas City Royals. It should be a good series and both franchises are looking to get back on top of the baseball world for the first time in a long time. Not as long as Chicago Cubs fans though. Good luck to both teams.
Tomorrow’s Federal Reserve meeting will provide the market with fireworks upon the announcement of the Fed’s decision. Markets are not pricing in a rate hike for this month. We have long contended the Fed was not likely to raise rates ANY time soon. It is important to note we do not invest based upon our thoughts on the Federal Reserve. Last week, the ECB once again verbally committed to doing whatever it takes and the market rallied hard. Look for the Fed to do the same. Rising rates will destroy the very market they are looking to create the wealth effect. Never mind the S&P 500 trading at more than 18.4x trailing twelve months earnings. More importantly will be how the market reacts to the Fed is what we’ll be paying attention.
More to come tomorrow with this market waiting on the Federal Reserve. Remember, we are running a 30% off special. Use coupon code: SCARY and take 30% off our subscription prices! Sign up NOW and get 30% off our subscription prices. Be better.
