Level 1. 189.96 pts (7%) or 2523.87
Level 2. 352.79 pts (13% total) or 2361.04
Level 3. 542.77 pts (20% total) or 2171.06
Now I was asked why I keep putting these circuit breakers in my note – Was I concerned about a break? Well on the one hand – YES and on the other hand – I thought it was helpful…let me know what you think? Is it a ‘negative’ or is it just reality?
Scene 2 – March 1, 2018, 10 am………. The curtain opens on Capitol Hill again …. Enter stage right – Uncle Jay (Powell) as he takes a seat and addresses the Senate Banking Committee vs. Tuesday’s House Financial Services Committee. He will once again present his take on the economy, on the tax cuts, on the proposed stimulus spending plans, wage growth, job creation, broad macro data points and what they all mean for inflation, for economic growth and how that affects the FED’s thinking when making future monetary policy decisions. This isn’t rocket science folks – it’s an analysis of the ‘State of Our Union’…….…Let’s hope the Senators on both sides of the aisle understand his mandate and quiz him (or grill him) on topics that are RELEVANT to his role at the FED and his role as the lead central banker in the global economy.
Remember – Uncle Jay has made it clear that he is not sitting in that chair to make traders on Wall St happy…he is there to steer the economy and do what’s right for the nation – regardless of what they may mean for stock prices…. Now that doesn’t mean he is immune to how the mkt reacts – he is just not going to ‘led around by the nose’…….
Soooooooo – after stocks came under pressure on Tuesday closing on the lows – the clowns sitting behind their high-speed computers thought they would pull a fast – and BUY THE DIP…. yeah…how’d that work out for you?
Yesterday morning – US futures were bouncing between small gains and losses prior to the open….and then the bell rang – the computers go to work – turning Tuesday’s weakness into early gains….as they tried to brush aside any concerns of volatility ahead…that was until about 2:30 – when the mkt took a turn as we entered the final stretch of the day…..As the mkt weakened – all eyes focused on the technicals……specifically the 50 dma……at 2736 on the S&P…… as we came ever closer – we tested that level…bounced a bit, held, and tested again….just to make sure the buyers were defending the position…..and when the sellers realized that the buyers weren’t there – they panicked…..WHAT? WHERE ARE YOU GUYS? WAIT…. YOU’RE SUPPOSED TO BE TEHRE……!
Soooooooo – stocks picked up steam and collapsed again into the closing bell…closing once again on the lows of the day…. that makes two days now where the mkt ended the day on or near the lows……and all this means is that do not be surprised to see more weakness ahead……Signs all over the place – in every language….…
’Caution – Floor Slippery When Wet’, ‘ Cuidada, Pisos Resbaladizos Cuando Esta Mojado’, ‘Attenzione, Pavimenti Scivolosi Quando Bagnati’, ‘ Attention, Les Planchers Glissants Lorsqu’ils Sont Mouilles’, ‘Vorsicht, Boden Rutschig Wenn Nass’…….
Look no matter what language you choose – Uncle Jay is not taking any hostages….so this is not the time to go to sleep…. Weakness does create opportunity – and patience is a virtue…. Capisce?
Every sector was under pressure – clearly some more than others…. Energy -2.3% and Materials -1.78% weighed on the broader market indices, while Real Estate -0.13%, Utilities -0.6% and Consumer Discretionary -0.45% ‘outperformed’ just meaning that they got hurt LESS. The Nasdaq dropped 0.78%, as tech lost 0.71%. and the VIX jumped by nearly 7% taking it up and thru 20. All this while US Treasuries ROSE sending the yield lower…
The dollar index – DXY – is gaining ground on higher rate expectations….as it kissed resistance and then broke thru to end the day on the north side… This morning the dollar is stronger again and is up 11 cts at 90.73…….and this is putting pressure on the commodity complex. think oil, precious metals, soybeans, corn, lumber, hogs, coffee etc….
OIL – WTI (West Texas Intermediate) fell by 2.2% – ending the day at $61.64 after US crude inventories increased more than expected and production is expected to smash thru the ‘old record’ of 10.05 million barrel/day. …. Oil also broke thru short term support at $62.04……(Hello???). And this morning Oil is lower again…down another 47 cts…as investors reconsider what to do next. Intermediate support for oil is now at $58.71/barrel…. watch as she struggles to hold onto short term support….
Gold also came under pressure also breaking its 50 dma at $1,325/oz……ending the day at $1,317/oz….and this morning it is also under pressure again…. falling $7 overnight …now trading at $1,310/oz……as it looks to find intermediate support at $1,305…
This is like Sesame Street….do you see a pattern????
Eco data today includes Pers Income and Spending – exp of +0.3% and +0.2% respectively. Init Jobless Claims of 225k and Cont Claims of 1.925 mil. Markit US Manf PMI of 55.9, Construction Spending of +0.3%, ISM Manf of 58.7, and Ward’s Total Vehicle Sales of 17.2 mil units.
European mkts are all under pressure despite some decent eco news…EU PMI rose to 58.6 vs. (E) 58.5 and the UK PMI hit 55.2 vs. (E) 55.0, but the decent numbers weren’t enough to offset the negative momentum from Wednesday’s U.S. close…and with Uncle Jay preparing to take the stage again – the mood is more cautious…. FTSE – 0.77%, CAC 40 -1.10%., DAX -1.56%, EUROSTOXX -1.12%, SPAIN -1.12% and ITALY -0.92%.
And US futures are lower again this morning currently down 9 pts in pre-mkt trading. …. – so, like the saying goes…March comes in like a lion and goes out like a lamb……will that be the story for stocks this month? We will also get Core PCE – (Core PCE – is the personal consumption expenditures index…it is another way to look at inflation….it also excludes food and energy – because they are TOO volatile…so if we take them out then we get a more stable read…. – which seems ridiculous to me – But Hey, What do I know?) If this report runs hot, that will push yields UP and stocks DOWN. Pull up the chair and turn up the volume…. Today is an important day for the mkts….
Take good care –
Kale Pesto with Shrimp
Kale known as the “Queen of Greens” is gaining in wide popularity as a veggie with rich nutritional value, health benefits and delicious flavor. Eating a variety of unprocessed green veggies is great for your health – you can make pesto sauce out of almost any veggie so making Kale Pesto is just another way to enjoy this great veggie. (You can always dress this up by tossing in some shrimp – see below.)
Pesto Sauce – easy…. you need fresh kale, olive oil, pignoli nuts, parmegiana cheese, garlic and salt.
In the food processor – blend the kale with 3 cloves of garlic, a bit of salt, enough olive oil to blend and a couple of handfuls of Parmigiana cheese. When blended – add in a handful of pignoli nuts and blend again. Transfer to a bowl and set aside.
In a pot of salted boiling water – add the linguine and cook for about 5 mins….
Now if you want to add the shrimp – then do so now. Add the fresh shrimp (cleaned and deveined) to the pot bring back to a boil and continue to cook…. about 3 or 4 more min… shrimps will be nice and pink and the linguine should be andante…. – Save a mug full of pasta water and strain all together in the Scolapasta (colander) and return to the pot –
If you prefer just the pasta then skip that step.
Add back ¼ cup of the pasta water and stir just to re-moisten…do not drown. Now add the pesto sauce and toss……Serve immediately in warmed bowls with fresh toasted garlic bread and your favorite white wine…. a nice Sauvignon Blanc goes great. Remember to have extra grated cheese on the table for your guests.
“The market commentary is the opinion of the author and is based on decades of industry and market experience; however, no guarantee is made or implied with respect to these opinions. This commentary is not nor being it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O’Neil Securities, Incorporated or its affiliates”