Once again buyers were out in the morning sending stocks to the highs of the session. The dollar rebounded today likely putting pressure on stocks, but tomorrow’s release of the last Federal Reserve meeting minutes have some on edge. Volume was lower across the board, but the lack of follow-through once again is very telling. The lack of direction is not all that surprising given the market we have been dealing with for more than a month. We are still looking for some follow-through in either direction. Once we get confirmation we can operate as such. Today’s session was not great, but not terrible.
Certainly the dollar will come into play as Alcoa – AA reports tomorrow after the bell. The two biggest currency pairs USDJPY and EURUSD are playing a huge role in the dollar strength. Japan continues pumping Yen into the market while the Eurozone is trying to play catch up with its own QE program. Given these programs their currencies weakening thus strengthening the US Dollar. How badly will the rise in the dollar impact earnings? AA will provide the first look tomorrow after the bell. Check out both pairs here:
Like we noted last night the Federal Reserve isn’t likely to raise rates any time soon. That will not stop many pundits from trying to figure out if and when the Fed will raise rates. The prudent move would be to let the market decide the natural rate, but we know the Fed cannot relinquish control over rates. Free market economists will continue to dream over free markets and sound money. After the release of the minutes at 2pmEDT a flurry of high-frequency trading will take place. We will let the dust settle and allow our trading to process to work.
The good news for those who are long this market like we are is we continue to find new longs. In an unhealthy market for longs we would not be finding any new longs. If we did find any new longs their failure rate would be high. We are not out of the woods just yet, but if we can get follow-through to the upside it would be great for our portfolio.
As for comic relief the Greece situation is quite amusing. Trying to extort money from Germany for WWII is a class move as they owe the European Union quite a bit of money. It will be interesting to see how this all unfolds as a loan payment is due soon. In fact, it would not surprise us if Greece does default this market just doesn’t explode higher. We are not trying to predict what will happen, but certainly this market is not too concerned at the moment with Greece’s potential to default and leave the Euro.
We will continue to stick with our process and execute. Keeping our losses small and riding our winners. Want to join us? Go here. Enjoy the release of the Federal Reserve meeting minutes.
