A great start to the day as traders quickly erased yesterday’s losses. However, it did not last long as sellers got ahold of the market and slammed it lower. The rollover appeared to be severe as volume was running hot and there were no signs of support until after 10am. Perhaps it was profit taking for those who have ridden the NASDAQ to all-time highs the past 7 months or another reason, but it did not look good. The market was able to stabilize and inch higher with a final push in the last 40 minutes of trading helped erase much of the selling from the morning part of the trading session. This uptrend is certainly resilient. Volume was higher and was aided in the last hour as large institutions performed their month-end rebalancing act. A good sign we continue to see this market find support and avoid nasty selling.
Small cap stocks looked as if they were about to lose March, April, and May lows. Like the broader market it too found support and was able to erase much of the day’s losses. Russell 2000 has and continues to be a laggard, but today’s action showed investors were willing to scoop up shares. IBB found support at its 200 day as big volume rushed into the ETF. Biotech’s continue to be stagnant as many investors are simply choosing the NASDAQ 100 to park their cash. If IBB were to run and biotech names were to trigger sound trading signals then we will take them. However, we are not about to guess they will come back to glory. It is best to let the market produce sound signals rather than be a hero.
The Federal Reserve’s beige book was released at 2pm today, but we didn’t see much reaction out of the market. The next Federal Reserve meeting is set to conclude on the 14th of June. At the moment, the market is pricing in an 88% chance the Fed will hike another 25 basis points. Given how financials traded today they are signaling the Fed won’t raise rates in June. Odds are by July we’ll see another rate hike barring any catastrophe. The guessing game will begin on how the market will react. We will let the seasoned market pundit professionals stumble all over themselves trying to figure out what will happen.
Let’s see what tomorrow will bring as we have had an interesting start to this holiday shortened week. Best of luck in your trading!
