Another interesting day with some great learning to be had. Multiple news items came into play today. The 10:30 Crude inventories was a huge build but Oil had traded down into the announcement then rallied. The news was “priced in” and it was a good learning moment if you were watching it live.
Everybody knew that the number was going to be negative, Business news was talking about it all morning. It was a case of “sell the rumor and buy the news”.
Nothing has changed since yesterday. The markets are still in play short term after a solid up day the S&P 500 closed at 1903 well above our watch out area.
News Driver: North American markets in “wait and see” mode for today’s 2pm FOMC rate meeting. Oil is trading at $30.50 as I write this and is trading in a range waiting for the 10:30am Crude Oil Inventories report.
European markets are down slightly and Asian markets bounced back nicely overnight (excluding China, it was flat)
Into the open we see a weak-form risk-off tone to equities globally, anticipating an indecisive trade leading into Yellen’s 2pm (EST) Monetary Policy announcement.
Pre-Market: Into the open we see a mixed sentiment in global equities but leaning risk-on
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.
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% .