Wall Street Preview:
“Sell Rosh Hashana, Buy Yom Kippur!
The Wall Street machine continues to produce new highs, reeling them out one after the next and not missing a beat. The large indexes recorded additional gains, notching off new highs on Tuesday. For the Dow Jones, it was its 41st high year-to-date. The S&P 500 recorded gains of 0.1%.
Despite the fact that indexes are barely moving, the most important thing is how individual stocks forge ahead, especially securities of the second and third tier. Take for example VBLT, which soared 24.1% yesterday, or HMNY, which took off no less than 63.79%. VERI traded up almost 35%! There’s an abundance of opportunities for individual traders.
After movement like this, many players are beginning to seek out a market peak in anticipation of a hairpin turn. Instead of focusing on reasons to stick to the trend, they’re concerned about being caught napping precisely at the point where the market takes a turn for the worse. Good momentum traders, though, need to focus on that which works! Why is it that a market at overbought levels can continue to rally and reach even more overbought levels?! A market like this isn’t fearful of the next impending disaster. The players driving the rally are focusing on price movement and sticking to a winning strategy, until it stops lining their accounts with more and more cash.
The Fed today will be wrapping up its 2-day meeting with a monetary policy announcement at 14:00. The central bank isn’t expected to hike rates but is likely to outline the overriding thinking going into the process of cutting the huge balance sheet it racked up upon trying to restore the economy after the Great Recession. The process of tapering such a hefty balance sheet is unprecedented, central banks worldwide now all eyes and ears!
The Fed has already hiked rates twice this year and is expected to raise the interest rate again before the year is out. The market’s expectations for a December rate now come to 58.3%.
Both the bears and the bulls are going to think well and hard today what’s going to happen when the Federal Open Market Committee makes its announcement. For the bears, last week’s rally has made way for a response the likes of “sell the news.” The market has shown no worry of late about the fact that the Fed is likely to tighten monetary policy, which means that it could easily take a spill if the Fed isn’t as market friendly as investors had anticipated.
The problem for the bears is that the market tends to respond positively to the Fed, even when the Fed’s tack flies in the face of the decision players were anticipating. The market is just in general head over heels in love with the Fed. With that said, another important topic at this crossroad that’s likely to help bears is the expression of time immemorial, “Sell Rosh Hashana, buy Yom Kippur.” Rosh Hashana begins, today, on Wednesday evening, and Yom Kippur, on Friday, September 29th.”
The above expression is just another facet of the well-known negative seasonality in September, which plays out primarily in the second half of the month. In the event the market rallies leading up to the Fed’s decision today, the conditions will be wonderful for profit taking this week – and up to the next 10 trading days.
In Summary: The momentum is strong. Especially in individual stocks and there’s no reason to fight the trend. At the same time, there are a number of catalysts developing which we should keep our eye on to see whether they’re impacting price movement.
The idea isn’t to try to predict the market peak but rather to be ready to respond quickly the moment trading conditions change.
Hot Stocks: BBBY, FDX, ADBE, BSX, GIS
Have a great trading day!
|Monday||10:00||Housing Market Index||65||Medium|
|Tuesday||8:30||Housing Starts||1.173 M||Medium|
|Tuesday||8:30||Import and Export Prices||0.3 %||Medium|
|Wednesday||10:00||Existing Home Sales||5.480 M||Medium|
|Wednesday||10:30||Oil Inventories||0.4 %||Low|
|Wednesday||14:00||FOMC Meeting Announcement||1.125 %||Medium|
|Thursday||8:30||Jobless Claims||303 K||High|
|Thursday||9:00||FHFA House Price Index||0.4 %||Medium|
|Thursday||10:00||Leading Indicators||0.2 %||Medium|
|Friday||9:45||PMI Composite Flash||54.9||Medium|
|ADBE||Adobe Systems Incorporated||PM||Tuesday|
|BBBY||Bed Bath & Beyond Inc.||PM||Tuesday|
|GIS||General Mills, Inc.||AM||Wednesday|
|MLHR||Herman Miller, Inc.||PM||Wednesday|
Today’s Picks – Day Trading!
New York Strategy Swing
Today’s Picks – Swing “New-York Strategy
No.1 – NLNK
|Company Name||NewLink Genetics Corporation|
|Sector||Healthcare | Biotechnology|