Which Way is Next?

Road signs - 'One way' and 'Or another'.

The S&P had a nice push up today, but it stalled near the previous all time high.  It was actually pretty impressive that it managed to get that high.  At 6pm yesterday the S&P 500 Futures did indeed pullback to a low of 2115, (I had mentioned yesterday that I thought that there may be a pullback to that region), but it had recovered enough by market open to be just below yesterdays close in the SPX index itself.  This caused a pretty strong V like bottom in the futures and I think we will see higher prices again tomorrow.  It wants to take out that high, not just the closing high as it did today.

The wild card is Janet Yellen’s speech.  Last time she spoke her soundbite of the markets being a little high caused an intra-day sell-off.  Hopefully she will not spook the market this time.  But even if she does it will be short lived.  I really feel this market has some more legs to the upside, which does seem a little counter intuitive, given the lack of volume or strong rally through the highs.  But it’s just a gut feeling.  I will of course follow my trading plan no matter if it goes one way or the other like the cartoon above.  As you can only win if you have a plan and the discipline to follow it.

Market News:

U.S. stocks closed modestly higher on Thursday, with the Nasdaq outperforming, as investors eyed slightly lower bond yields and mostly shook off the morning’s mixed economic data.

The S&P 500 ended mildly higher, above its previous record close of 2,129.20 to set its 10th closing high for the year.
The Nasdaq failed to top its closing high of 5.092, despite Apple gaining 1 percent and Amazon closing up nearly 2 percent. The Dow Jones industrial average ended just 0.34 points higher after repeatedly dipping into negative territory.

Markets mostly shrugged off mixed morning economic reports. The Consumer Price Index, a key indicator for inflation, is due Friday morning.

Existing home sales for April fell 3.3 percent, missing an expected 1 percent gain to 5.24 million units. Earlier in the week, reports showed home builder sentiment fell in May, but housing starts for April came in much better than expected.

Manufacturing PMI came in at 53.8 for May, below expectations of 54.5. The initial read showed slowing growth for the second straight month, with new orders increasing at their slowest pace since January last year, financial research firm Markit said.

The May U.S. Philadelphia Fed Index showed a gain of 6.7.

The Conference Board’s leading indicator index, which forecasts future economic activity, showed a gain of 0.7 percent in April. The index was expected to register the 15th consecutive increase, given a decline in initial unemployment claims.

Art Hogan, chief market strategist at Wunderlich Securities, said the leading indicators was encouraging for stocks. “The second quarter is looking stronger,” he said.

Weekly jobless claims came in at 274,000, above expectations of an increase to 271,000 from the prior week’s 264,000. The 4-week moving average remains the lowest since April 2000.

Fed Chair Janet Yellen is scheduled to speak on Friday at the Greater Providence Chamber of Commerce Economic Outlook luncheon at 1 p.m. She is not expected to take questions.

U.S. Federal Reserve Vice Chair Stanley Fischer said on Thursday at a forum that the euro zone crisis had made the monetary union stronger and proved that the European Central Bank has the ability to carry out effective policy in the region.

Friday:

Earnings: Campbell Soup, Deere, Foot Locker, Ann, Mentor Graphics, Krispy Kreme

08:30 a.m.: CPI

09:45 a.m. Manufacturing PMI

01:00 p.m. Fed Chair Janet Yellen at the Greater Providence Chamber of Commerce on economic outlook

One Response to “Which Way is Next?”

  1. Jeffrey M

    Good call today John!

    Reply

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