One day removed from the panic post Fed stocks could not find enough buyers to hang in positive territory. There were enough to elevate the stock market off their lows of the session. The lack of bulls and oversold conditions a bounce is certainly not out of the question here. Breadth was less than desirable and while we can point to a lack of bulls we are just not seeing a ton of strength. Utilities led the entire market higher while Consumer Staples were not too far behind. Not the growth sectors you want to see holding up the market here. Financials reversed after pushing higher this morning. Perhaps too far too fast as the group hopes the Federal Reserve will normalize rates sooner than previously thought. We still remain in a fairly large range, but continue to see weakness. Stay nimble.
Tomorrow’s option expiry should make early trading interesting. It is easy to expect the market to bounce here given AAII Bulls are at 19% and Bears at 34%. Most are simply neutral and have absolutely NO clue which way the market is headed next. We only know uptrend and downtrend, but sentiment has been useful in the past. It will be interesting how this will play out. Bulls have been non-existent since February lows. Will they stay in hibernation?
The stock market will now have to adjust to the possibility of a rate hike in June or July. Doubtful a rate hike would occur on both dates. Our process will dictate how we react to price action. Opinions are useless in this game. Have a great weekend and we’ll see everyone in the chat room tomorrow!
