There wasn’t much exciting hit the street today unless you are into watching financial news. Volume was off quite a bit as it appears many market participants weren’t willing to hop into the market today. Utilities were the winners of the day leading the S&P 500 higher. So many reasons we could make up for the move in utilities, but all we need to know is it is keeping the S&P 500 afloat. Bond yields on the 10 year treasury were slightly higher after spending the morning below 2.60%. If anyone tries to convince you this was something bigger ignore them immediately. On the downside today, small caps closed lower on the session with IWM closing lower by .12%. We still remain in limbo with this market and it appears neither bulls nor bears have been able to win any battle just yet.
Volatility continues to be anemic. The S&P 500 remains close to new highs, but has lacked the ability to hold those new highs. Today’s tail is somewhat bullish, but without the thrust in volume we’ll continue to wait on our elusive confirmation day before we commit to this market heavily on the long side. Even if we do volatility is so minimal any rally has a very high probability of failing. Big rallies come from when volatility spikes and spikes hard. Unfortunately, at the moment we don’t have the conditions in place to spark a big rally.
Another negative we could see impact the market, but more importantly really hit the wallets of those who are most likely to be affected by inflation. Food inflation does not look too good for those who are sensitive to spikes in food and energy prices. Energy remains expensive for most, but many can get around by cutting use of energy. It is extremely difficult to cut down on what you eat. As a whole Americans are certainly overweight, but when price of food continues to skyrocket it puts more pressure on more than just people’s wallets. What do you do with food stamps if costs get out of hand? Check out these two charts of food inflation and decide for yourself:
Price will always lead and what we see here is the cost of food is in an uptrend. Not a strong or weak, it is simply in an uptrend.
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We continue to operate under a sell-signal with the S&P 500 and Dow holding up the entire market. Weakness remains among small caps and in the NASDAQ. Stick to the plan and stick with Big Wave Trading.
