The story of the session was another big intraday move only to find buyers at the lows to push the markets back above the mid-point of the session. AAPL was part of the winners as the stock broke towards the $600 level something it hasn’t seen since 2012. The intraday slide began just after the markets hit their highs at 10:30 am. Pending home sales were much better than expected helping to fuel the bulls’ fire pushing the market to the highs of the session. Volume was big on the day compared with Friday’s session. Today marked Day 9 for an attempted rally and now with AAPL leading the charge anything is possible. It is clear big cap names are in control and are the leaders of this market like it or not.
Tomorrow’s session will mark the start of the FOMC’s two day policy meeting. The FOMC will release its policy decision at 2pm EST. It will come after first quarter GDP release that morning. There is a possibility this market makes a move prior to the meeting, but does not come with a high probability of occurring. Market participants typically ignore price signals and simply wait for what the FOMC will do with its policy. We haven’t got a clue, but it is likely they will continue with their taper and have concern over inflation. The reaction to the release will be most important to us and while we are in sell mode a follow-through day would adjust our model. We’ll wait till then to find out which direction this market will want to move.
Even if we do see a follow-through day our current leadership and lack of fear simply doesn’t point to a big move in the markets. Energy and big caps won’t excite many and won’t push this market much higher from here. The lack of fear and even bears certainly doesn’t lay out the framework for a big move in stocks. When was the last time the VIX closed above 20 for more than a day?
The market continues to await the policy statement from FOMC on Wednesday. Until then, we’ll continue to operate under our current model and push forward.
