For the first time this year the S&P 500 closed down five straight sessions. Is there any meaning to this? Not likely, but it is a fun point to bring to your attention. Early economic data was not kind with a weak Durable Goods number. New Home Sales were above expectations, but prior month’s revisions showed weaker growth than first reported. Sellers were quickly washed out when the Fed’s Permanent Open Market Operation flooding the market with fresh liquidity. Like Tuesday, POMO was faded with the market closing near the session lows. At first glance volume was lower across the board for both the NASDAQ Composite and S&P 500. Therefore, we did not notch a day of distribution. We are still waiting to see where price takes us and as time progresses we’ll follow right along.
The biggest hiccup most can’t get around is the debt ceiling fight going on in Washington. Although it appears only Ted Cruz is the one waging the battle for the shutdown. Washington will remain a place where hypocrisy reigns supreme. It is anyone’s guess what the market is bracing for whether it be the debt ceiling, pension rebalancing, or for the Jacksonville Jaguars to win a game is anyone’s guess. The problem with trying to figure all of this mess out and figure out the direction the market will go is impossible. Underlying strength is there even with the end of day selling. This does not guarantee this market will move higher, but gives us a higher probability the market will move higher.
It is quite funny the market hasn’t gone straight up since the “No Taper” announcement from the Federal Reserve. Weren’t we supposed to continue to march higher? Did anyone guess a no taper announcement would lead to the market hitting stall speed? Evidence points to us simply following price and leaving others to figuring out how they should be positioned.
What will be fun tomorrow morning will be the announcement of second quarter GDP. Expectations are for the 2nd quarter annualized rate to be 2.6%. Mind you this is after the government made changes to the calculation. The change effectively was put in place to paint a rosier picture then the old calculation gave. In the end, the reaction will be the most important and what we’ll be focused on.
Stay on the trend. Cut those losses.
