This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.
Otherwise, enjoy the column!
Subscribe to the Monster Stock Market Commentary and join the 2,480 subscribers getting it for FREE every day!
Stocks finished the day lower, although managed to stage a mild rebound to finish out the day. The S&P 500 did fall by around 1.4% earlier in the day but then rebounded to close down around 45 bps. The decline started before the CPI report, tumbling along with the European market following the surprisingly hawkish announcement of a slower bond-buying program.
The S&P 500 gapped lower, erasing half of yesterday’s losses, but managed to claw its way back as traders sold put options. This was seen specifically in the SPY ETF, which finished the day with positive delta hedging.
It appears the SPY is consolidating sideways, and I don’t have a clear handle on how the consolidation breaks at this point. A close above $430 would be a breakout, giving the ETF a chance to rise to around the gap at $435. But a breakdown would likely lead to the lows of February 24 being taken out.
The 2-Year rate is now trading over 1.7% and seems to be on a path higher to 1.85% in the near term. The ECB’s surprisingly hawkish announcement should help push rates higher here in the US as European rates get pulled higher.
After falling the last two days, the IEF/LQD ratio increased today. A sign that financial conditions are back to tightening.
That’s going to be all for today.
Mott Capital Management, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future results.