Morning Market Thoughts
The market is weak this morning as the FOMC begins its two-day meeting which culminates tomorrow with the release of their economic prognostications. That should make for a bit of a tame, low volume trading dynamic. But oil prices fell last night and, as you know, the indexes are currently moving in lock step with oil. The Bank of Japan also left rates unchanged after its two day meeting — and Asian stock traded lower in response.Interesting that investors over in Asia are disappointed that the BOJ left rates the same rather than lowering them; and we are looking at the Fed and wondering whether it will raise rates.
If you look at the daily chart of the S&P 500, you’ll see that this index is pulling back right where you would expect it to — after pushing against the 200-day moving average. We’ve seen this type of 3 steps forward, 2 steps back dynamic for a while. But now that the S&P is failing at a well established resistance level, it’s likely that we’ll start seeing 2 steps forward…and 3 steps back. So if your goal is to make money over time, then this isn’t the right time to be wading into the market unless you have a compelling stock that is on your screen. And in that case, be sure to define your risk so that a reversal in one stock doesn’t wipe out your gains.
Two stocks to watch today are Home Depot (HD) and Apple (AAPL). They’ve been getting some positive coverage on CNBC this morning. Home Depot is breaking out of a 2 month consolidation and looking like it’s heading up to test its all time high (about 3% higher than the current price). I’m not suggesting that you buy it today because a stock that is just 3% below its all time high is a stock with a low ceiling. But it pays to keep it on your watch list because stocks that are strong during weak market days will often do very well when the market starts moving higher.
Apple (AAPL) is also up this morning after Morgan Stanley said that iPhone sales are tracking above expectations. This looks like a gap that might hold. The stock is currently at $104.68. If it falls back below $102, then this breakout is really a fakeout.
A quick shout out to Suz, who contributed her chart work on Reynolds American (RAI) to Mad Money last night. Nice to see SMM/OMM members getting out there in the financial media market!
Don’t forget about tomorrow night’s Q&A webinar at 8 pm ET (5 pm PT). Gary will be providing information on that event.
Dan
Market Update