Stocks put together a significant turnaround during yesterday’s trading after facing downward pressure at the opening. The large indexes succeeded in climbing back into positive territory after the release of the latest Fed minutes.
After rallying for a week after signs of cooling in the trade war between the U.S. and China, the market, of late has found a number of reasons to take a turn for the worse. The selling began on Tuesday afternoon, after President Trump scaled back his expectations for the summit planned with North Korea and noted that he wasn’t satisfied with the results of the negotiations his team was holding with China. The negative catalysts went on, with expectations that Saudi Arabia would ramp up its crude supply in light of sanctions against Iran, and ongoing demonstrations in Venezuela against its failed dictator’s questionable election victory. Other news affecting market movement yesterday included the crisis in the tumbling Turkish Lira and the consequent rate hike by the Turkish central bank, from 13.5% to 16.5%.
On Tuesday it was the bears who embraced the intraday downward reversal movement, the market closing at its bottom. Yesterday, it was the bulls who relished intraday upward reversal movement, the market closing at its high. The net change of less than 1 point on the S&P 500 over the last 2 days creates the impression that it’s been a little bit of everything for everyone!
President Trump’s pronouncements about the trade discussions with China took most of the blame for the downward movement over the first half of yesterday’s trading. In the second half of the trading day, the Fed minutes got most of the credit for the strength that lasted into closing. We’re not sure how much real import the Fed minutes have in practice, especially seeing that the figures are somewhat passé and already known, but it was a good excuse for the market to climb!
What’s clear in the market as of now is that it’s been confined to a trading range and has created stellar opportunities for investors in individual stocks. There’s been beautiful and broad-based movement in individual stocks and despite the fact that here and there, automatic trading programs are set into motion, the market isn’t been driven fully by the indexes.
All-in-all, the large indexes have continued to boast a positive technical pattern and the rebound yesterday from the downward gap at the opening, gave traders an adrenaline boost. At the same time, we still aren’t seeing the type of momentum the market salivated over during its strong January uptrend.
This is a market that works well for traders who know how to seize opportunities, and less so, for dogmatic bulls or bears. Being strait-laced and beholden to either direction could be limiting and even constitute a trader’s downfall in the current market.
Thursday: Today’s trading is expected to be affected by these 2 economic releases: initial unemployment claims at 8:30 N.Y. time and existing home sales at 10:00.
On the earnings front, LB, NTAP, and WSM released their quarterly earnings results yesterday after the closing bell; today, they’ll command investors’ attention. BBY, HRT, and MDT will be among the companies reporting before today’s opening bell.
Have a great trading day!
Today’s Picks – Day Trading!