A disappointing day for economic data as Retail Sales and Empire Manufacturing missed their targets. Empire Manufacturing fell well below expectations indicating a slowing at least in the manufacturing sector. Buyers would quickly step in despite a sluggish start and pushed this market back to last week’s high. This market continues to wedge itself higher and is increasing the risk we see a negative reaction from the market post rate announcement from the Federal Reserve. We have come a long way in a relatively short period of time and would be nice to see more consolidation rather a rapid advance higher. We still contend this Thursday is a pivotal day for the market and will either continue this rally or end it.
Bonds were trading like the Fed is about to raise rates. The 10 year treasury yield is at 2.274% and the decline in bond prices is quite evident just looking at TLT. TLT is trading below the most recent lows and prices not seen since July. The Bond market certainly indicating it thinks Yellen is going to raise rates. XLU is the other Canary in the Coal Mine for the Fed and whether or not the Fed will raise rates. XLU moved higher today, but is not sitting at multi-month highs and trading like traders are piling into the ETF.
We did get a less than desirable close, but a solid day of gains. Scans are less than impressive, but it may be this market needs more time to produce better trading setups. There are some decent setups out there. You have to have a keen eye to spot them.
Stick with the plan and stay patient.
