The S&P 500 closed into resistance of 1,950-1,940 with a weak-form risk-on sentiment. The Markets finished in the green but defensive assets like bonds (TLT) did not sell off suggesting investors were not convinced and held on to their defensive positions.
The Markets gapped open and we strong form RISK ON most of the day. The Nasdaq and the Russell out performed and helped lift the markets to back into the 1928-1921 support structure. Oil continues to be buoyant and is approaching the $31.50 resistance level as I write this (6:25pm EST). The 2pm FOMC minutes revealed that the FED is may need to put a hold on additional rates increases with a slowing economy China’s weakening growth and increased market volatility.
We entered the day with a weak form risk off tone as discussed in the Morning Huddle. Oil remained weak throughout the day closing down 6.8%. North American markets gapped down at the open but slowly grinded higher throughout the day. Closing above the 1928-1921 watch out point but still just below the 1950 resistance structure.
It was an interesting day for the markets that started weak form Risk off (investors not buying high risk assets) then quickly turned RISK ON (buying higher risk assets) after the Crude Oil Inventory number was released.
The number was a huge build of 8.383M over the forecasted of 3.277M but Oil immediately rallied. The bad news was expected and oil traders took oil on a nice run to $32.84.
The S&P 500 has been strongly correlated to the oil market and rallied also. However, the mood changed quickly after the 2PM FOMC rate announcement. Rates were left unchanged but Yellen’s dovish comments spooked the markets and the STRONG RISK OFF selloff began with some substantial volume.
North American markets experienced downward pressure most of the day. This came as no surprise as we discussed in the Morning huddle this morning. Oil was the driver today and it wasn’t pretty down more than 7.4% .