Wednesday recap: Equity markets turned back a late day swoon to finish with fractional to moderate gains, despite some mid afternoon volatility following the 2:00 PM release of the minutes from the March FOMC policy meeting.
NASDAQ, +0.8% at 4950.82 easily outperformed driven by the strength of Biotech; IBB +3%, and Social Media; SOCL +2.6% names.
Gains in the DJIA +0.15% at 17,902 and the S&P 500 +0.3% at 2081.90 were muted by concerns over the impact of the US Dollar’s strength on upcoming 1Q earnings and Oil trading 6% lower after Wednesday’s report of a near record inventory build.
The DJ Transports +0.7% at 8668.58 not only rallied for the 2nd straight day after hitting a 5½ month low on Monday, but also closed right at its 200 day Moving Average of 8670.18. This is “gut check” time for the Transports.
Will they be continue to build on a mini “V” reversal chart pattern after hitting a near 6 month low, or will the 200 day MA prove to be stiff resistance for 3rd straight day of gains.
Volumes have notably light this week as investors look direction from 1Q earnings and unresolved issues around the globe. It’s been reported that Greece did make their payment to the IMF yesterday. Certainly a step in the right direction, but still as ways to go in that drama. UK elections are just around the corner as Prime Minister David Cameron seeks a third term, with high stakes involved for the future of their EU participation.
No doubt domestically, 1Q earnings, the timing and pace of FED interest rate hikes, and expectations for the price of oil through the remainder of the year are the largest influencers on the horizon.
Today’s market will likely continue be range bound. While Eurozone markets are stronger across the continent on more positive economic data from Germany,
There’s some concern building over the sustainability of the recent rally in Asia. Most notably the Hong Kong Hang Sang market has rallied 12% in the last 2 days.
The Early Line on our market has stock index futures pointing toward a modestly lower opening. After that we’ll have to see if NASDAQ has the firepower for another run at 5000. and how serious the resistance is at DJIA 18,000 and S&P 2100 on any rally attempts.