Futures were pointing to a much lower open after global bond yields were racing higher. Fears over a Federal Reserve rate hike certainly were running rampant throughout the market, but buyers were not about to go quietly in the night. Lows of the day were set very early in the morning as buyers were rushing in to scoop up shares across the board. Energy names were helped out by rising Crude Oil prices reversing some of yesterday’s losses. Today’s session certainly highlights the market still has quite a bit of support despite fears over the Federal Reserve hiking rates and a tough seasonality period approaching. One downside today was we continue to see this market close on weakness rather than strength even with the massive intraday support. Today was certainly a good sign, but once again we continue within this base building consolidation period. Until we break in either direction with conviction we will remain in this range.
Our market model has us in neutral mode while we still see the IBD outlook as “Market in Correction.” We are not going to count distribution days until we get an upside confirmation. It is important to highlight even though we ended the day lower this market was able to close in the upper half of its range. A bullish signal for this market not confirmation or a guarantee we push higher. Continue to stick with your signals and managing risk in accordance with your risk management strategy.
While indexes gained quite a bit of support intraday the Russell 2000 was saved from heavy morning losses. At the lows of the session IWM was down 1.5%! It was able to find its footing and close out the session with the least amount of losses. Today was quite a victory for the ETF leading to the downside when the market kicked off trading today.
This market will eventually break in either direction. Consolidating this long in this range does suggest whatever trend comes next will not be short-lived. If we could predict what was about to happen it is highly unlikely we’d reveal to the world what we know. Although, you will have plenty of people claiming they know where this market is headed next. All we can go on is the information from the price action up to this point in time. Until this market breaks in a direction with force it is best to continue to play in a position of power and odds in your favor. Otherwise you open yourself to unnecessary risk.
