Inflation data along with news Wells Fargo paying back its share of the TARP set the tone early on. Producer prices rose higher than expected sending a bit of fear into traders as early morning trade reflected a fear trade. Bucking the trend was Wells Fargo, but it too ran into resistance. A more pressing issue is another distribution day was tagged for all major indexes. Closing near the lows this market once again threw a major league curve ball.
Outside of financials weighing down the S&P 500 was Best Buy who reported earnings prior to the open. On Monday the stock hit a new high and it appeared off to the races heading into its earnings. Traders, unfortunately, had other ideas and quickly sold off the stock despite the company raising estimates. Regulation FD has certainly played its part with how these stocks move. Best Buy proves it is wise to take your profits as your stock moves up.
In part, tomorrows Federal Reserve meeting may have played a part in traders getting out of the way. The last hour showed panic like selling suggesting to me the Federal Reserve is scaring many traders. Perhaps it was short-sellers anticipating a negative move tomorrow. Either way, what matters is how are individual stocks are holding up and how the closed. We do have plenty of distribution days and should be aware of this. But, to ignore the action of our individual stocks, by making decisions based on the market is unwise.
The NASDAQ was able to hold a key level at 2200. Many view this “whole” number as an important technical area. Just as important, the S&P 500 and its 1100 level of support is an area where many are paying attention to. We are aware of these levels, but again taking our cues from our individual stocks.
Outside of the Federal Reserve meeting is the release of CPI numbers tomorrow morning. CPI will certainly spark debate on whether or not inflation is in check. Today, PPI did show a rise in prices at the producer level. However, we’ll see if those price increases were passed along to the consumer.
Stick to the individual stocks, we remain in an uptrend that is shaky. But, remember, the uptrend remains and until it is broken we’ll stick with it.
Do not forget to take advantage of our holiday special.
Enjoy!
