Yellen disappointed markets yesterday not being as dovish and defacto implying the move in Dec 2015 was spooking investors. The statement does lower odds of a March 2016 rate hike, but on the basis of a global slow down.
Read last nights Market Re-cap for more details
The markets sold off after the announcement but did not break major support floors, the S&P 500 held above 1,880-1,870 and we maintained the HOLD decision for mid-to-longer-term positions into yesterday’s close.
News Driver: Oil and earnings will be the focus today as we enter another heavy earnings day today. European markets are down moderately between -.6% and -1.5%. Asian markets had some choppy trading and closed slightly down with Hang Seng up +.75%. China was the laggard again down -2.61%
Pre-market we see a mixed sentiment towards equities, leaning risk-off in the Eurozone, and leaning risk-on in North America.
Here’s a peak at the eMini Futures contract….
Our bias remains the same.
MID-LONG TERM (Weeks-To-3Months+): Bearish
If the S&P 500 breaks back below 1,880-1,870 (a key support floor), and if the Crude Oil (WTI) reverses back below $30 aggressively. This market has more downside risks than upside potential in the mid-to-longer-term. Look to De-risk long positions with rallies unless you can stomach the volatility.
SHORT TERM (Days-To-Weeks): Bullish
Entering this week higher risk long side positions were on play with the deeply oversold technical bounce that started January 20th, 2016. S&P 500 (SPY), Nasdaq (QQQ), Russell 2K (IWM), Int’l Developed (EFA), Emerging Markets (EEM) and TSX (XIC).
We remain in HOLD mode on these positions into the open, looking for a momentum break above 1,928-1,921 on the S&P 500.
S&P 500: Prior to the release of that data we saw the S&P 500 up +0.4% trading in a sideways range into the open, after the data printed it broke down to the pre-market floor but still holding in positive territory +0.14%. On the backs of some positive Tech earnings we see leadership to the upside from the Nasdaq +0.8%, however Small Caps are just moving in tandem with the S&P 500 +0.14%).
TSX: Out-performs at the open, holding well above 12,345-12,300 (support); a break and close above 12,437
Bonds/Gold: Defensive assets remain dislocated and expensive and are mildly strengthening within resistance structures pre-market, with knee jerk bids on the backs of the poor durable goods numbers (TLT+0.5%, Gold +0.5%).
Oil: $32.80 8:30am: The tone is mixed but still leaning weak-form risk-on. This is further supported by the trade in Oil, currently WTI is up +1.5% holding well above core support at $30.80.
Economic Calendar: 8:30am Initial jobless claims inline with forecast at 278k vs 282k. Core durable goods lower than expected at -1.2% vs -.1% this is negative for the US dollar. Futures reacted negatively but have stabilized.
10am is the last major data point to watch that could move the markets during the day. Pending homes sales (MoM) is forecasted for 0.8%. A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
Earnings: Facebook reported after hours last night and the markets like what they see. Facebook is up over 14% pre-market. Other notables to watch are Amazon AMZN, Amgen AMGN, Caterpillar CAT and Ford F.
For a complete list of today’s earnings visit the earnings page on our site.
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