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MARKET WRAP UP 08/09/10
Despite the impressive performance by some individual issues, as well as the positive tone of the broad market, stocks generally remained in a holding pattern ahead of tomorrow’s meeting at the Federal Reserve. With the S&P 500 closing up 0.55% to 1127, we are still operating below the key 1131 level, which marked the precise print where we touched and sharply reversed down to 1010 back on June 21st. While breadth was strong, volume once again was notably weak, even for the summer.
Nonetheless, as the updated and annotated daily chart of the S&P 500 illustrates below, we closed above all of the major moving averages heading into the big Fed announcement tomorrow.
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Turning to other key indices and sectors, the emerging markets and transportation stocks remain highly impressive areas of the market. However, the daily charts of the Nasdaq Composite, the small caps, and the financials are slightly lagging the progress of the daily S&P 500 chart (see charts below).
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Given the individual strength and breakouts that I saw today, it was tempting to significantly raise my long exposure. However, the whipsaws surrounding days when the Fed meets and announces have historically been nasty. Rather than use all of my ammunition before the market confirms a breakout, I will wait for a convincing break and hold above 1131, preferably on more impressive volume than we saw today.
Unlike Ben Bernanke, I am not going to use up all of my bullets before I have to.
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TOTAL PORTFOLIO:
EQUITIES: 52%
- LONG: 52% ($BZ $OVTI $ISLN $GNK $LSCC $RDWR $BX $CMI)
CASH: 48%
I am hopeful here also. 46% long 54% cash.
Let’s hope the Fed says something nice.
I almost followed you into BZ today, but by the time I made up my mind and figured the # of shares and stop, BZ had already moved a ways up and I began to feel like I was chasing.
I really have a problem with a number of today’s moves, I’ve never seen volume this weak for a non-holiday. Example – the QQQQ did 26 million shares today, that’s unreal! We’ve did over 280 million before on those and the average is over 80M. I think some of these charts that have really started to look better on extremely low volume need to be second and maybe triple guessed.
All valid points. However, keep in mind that the February-April rally this year was on very light volume as well. Those were an awful lot of gains to miss out on, despite the weak volume.
There is talk of 3% prime mortgage rate. I paid 0 for my last two cars. If they get houses down to 1, I’ll think about it…..
It will be better for the FED to surprise later rather than telegraph tomorrow. Worth more S&P handles that way! At this point I think they are well coached on market reaction.
I thought about adding today, but as the day wore on I was like Hawaii, and realized I should have jumped earlier IF I was going to…..in the end I bought some TZA into the close to hedge my longs (sitting about 55% invested). The more I pondered the Fed, the more I realized there is almost nothing that is going to make the market happy. Do nothing, treasuries and stocks fall due to perceieved lack of support. If they do move on QE2 the bond/debt vigiliantes get out the pitchforks…..ask the question “What would the fed have to do to get the market to go up?”….got an answer? I doubt they have one either.
Worth the read:
http://www.marketwatch.com/story/reagan-insider-gop-destroyed-us-economy-2010-08-10?dist=bigcharts
“Trannies are the studs of this market”
I laughed! Nice post Mr Wine!