AAPL’s reaction to earnings was quite harsh as the stock closed just above the $500 level after erasing 44 points on the day. Due to AAPL the NASDAQ simply could not keep up with the rest of the indexes lead by the Russell 2000 closing higher by .93%. Volume was down across the board even with the surge in volume out of AAPL. Due to the Federal Reserve Policy announcement due out tomorrow trading likely was lower as many are going to wait to see if Bernanke and crew taper further. The day’s action did help turn around the Dow’s five day skid. Day one of a new attempt at a rally didn’t show tremendous strength. Tomorrow’s sessions should be interesting given we have seen tremendous moves on Federal Reserve Days. The market model is in neutral and we await further price confirmation from the market.
Getting the morning started was a tremendously disappoinging durable goods number. Evidently consumers aren’t rushing out to purchase big ticket items. I am sure the weather had something to do with sales, but with the internet does weather even impact retailers? It is anyone’s guess as to the reasons why and we’ll leave it to someone else to figure it out. Case-Shiller did not meet expectations, but with home values up 13.71% year-over-year many ignored the miss in expectations. Finally, Consumer Confidence registered better than expected. Leads to the question if consumers are more confident then why were durable goods down? Ah, thank goodness we can simply follow the trend and not have to worry about unmasking human behavior in economics.
Now back to price action in the market. Volume simply has been neutralized this entire run up from the 2009 lows mostly likely due to the QE. Primary deals get fresh cash they can put it to work and while they are getting big money it isn’t kind of money big institutions use to procure positions. Price always pays and so far while we are neutral mode we aren’t collapsing either. This week’s sentiment indicators will be something to look out for. We will see if the recent sell-off has caused a shift in sentiment.
Tonight the President of the United States will give the State of the Union address. So far we have been given clues the President will speak about Income Inequality. Unfortunately, we have seen inequality grow on this watch. Not too mention the President taking a 17 day vacation to the island of Oahu. We are curious how in touch he is with those who struggle to find jobs? Typically an upbeat speech should get traders bullish for the start of the day. By the time the Federal Reserve announcement hits the market will have forgotten the speech. Therefore, it is best to stick with how the market reacts and then we simply react with the market.
Stick with the process!
