SUMMARY:
- Stocks handle FOMC minutes, post modest gains on rising volume.
- FOMC not ready to slow, ready with more 'measured' rate hikes.
- Existing home sales rise 4.5%, post another record.
- SOX leads the way for eighth NASDAQ gain as market as NYSE indices trying to consolidate laterally.
- Need some more consolidation to set up the next move higher, but many leaders are already doing that.
Eight in a row as FOMC fails to stall bullish sentiment.
Stocks were pretty quiet heading into the FOMC minutes from the meeting just three weeks back. As expected they were trading modestly negative, but as the meeting approached SOX and NASDAQ started pushing positive. It was no major move, just firming up the range for the session. After the announcement stocks were undecided, but then made a definite push upside into the close.
All but DJ30 and SP400 ended up positive for the day. The gains were not anything significant (4.97 pts on NASDAQ, 0.21 pts on SP500), but the point was the action: soft start, overcame concerns about the Fed, moved positive into the close. Volume even ticked higher on both NASDAQ and NYSE, a sign that some buyers moved in after the softer session and picked up some shares, driving them positive into the close.
It is thus far not much of a consolidation. It definitely has not been a pullback; eight up sessions straight on NASDAQ is not what you call a consolidation. SP500 is the closest to a consolidation, but all it has really done is slow the move higher and give the appearance of a lateral move. It is creeping higher, however, and with the low volume it still looks ready for a pullback of some sort. With this move, you have to ask what is a pullback? It may turn out to be a lateral pause before the upside resumes. In strong bullish moves a short lateral move for a few sessions may be all you get.
Is this a strong move? Volume certainly is not exploding higher. Indeed, the only volume of note has come on just three occasions this month. Those were three important sessions, however, as those were the strong upside moves that powered NASDAQ and SP500 higher in this move. It may be sparse, but it was at key times and propelled this rally.
Outside the indices, the leadership has continued to hold up very well. A market can go nowhere without leadership, and the strong stocks we have been moving into since the rally started continue to hold their moves along with the rest of the market. Those that are testing are holding their near support on low volume. That is exactly what you want to see them do when they rest from strong moves. When the indices stall out some, however, they are going to have to hold still. Indeed some of them will need to step up and start leading even as the market overall pauses. The ones we have in mind are those that led the move off the recent low, e.g. the healthcare and medical stocks. |
