On Tuesday morning, the stock market got off to a positive start, after all the market was down on Monday so Tuesday had to be an up day. When the two pieces of news came out after the first half an hour, the market was conflicted but chose the “Fed is tough” trade and sold off. The consumer confidence numbers proved the consensus wrong by going up a couple of points rather than down. The existing home sales advanced a little last month but don’t forget this is a bit of a lagging indicator. Existing home sales are usually measured when they are “closed” not when they are sold. In any event the market found a low to trade off in the early afternoon and managed to trim its losses before closing down only modestly.
Wednesday brings us some interesting items including the durable goods orders, the March New Home sales and the Fed’s Beige Book, all of which could have some impact on trading. The durable goods orders are expected to be up 1.6% after last month’s 2.7% increase. New home sales may rebound after last month’s huge 10.5% drop and the consensus is just that, up about 3.2%. This number is more of a coincident indicator because new home sales are recorded when sold not when closed. And, we are very interested in this number here at the Wednesday Update. And, lastly, the Fed’s Beige Book can bring some excitement to those bulls out there who think that a halt in the interest rate hikes is bullish. We’ll see what happens.
As for the bond market, it was not happy with the housing numbers this morning, even though the inventories went up again. The bonds got hit for about 10bps which is pretty big for one day. The consumer confidence number being strong also added to the “sell bonds” bias on Tuesday.
The technical landscape is extremely dangerous right now. We have mentioned the past few days that the market may want to be a little volatile over the next few weeks and that is our current stance. However, there is no reason to be long this market any more. There are better places to be, namely cash, right now. If you’re trying to trade this market you will probably get sliced and diced. The market will look like it’s going up for a few minutes or hours and then turn on a dime and drop and look like it’s going down. It will be so easy to lose money trading. After this volatile period, it is almost a certainty that the market will go down starting sometime in the next month and dropping into the fall as it normally does. So, Please…
Be careful out there…
Dow Industrials: 11,283.25 -53.07
RYVNX: 18.40
RYAIX: 21.92
TLT: 84.13 ouch
BEGBX: 13.14
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment