The internals I spoke of included Monday's Dominant price/Volume Relationship among the component stocks of the major averages that I track daily which was a short term oversold, Price Down/Volume Up on Monday and A VERY Dominant relationship with 282 of the SPX 500 falling in to this category of Price Down/Volume Up which is the same as Monday, a short term oversold condition, but also a generally bearish condition that usually results in a near term correction (bounce in this case). Yesterday's tone was more dominant than Monday's.
Of the 9 S&P sectors I track, 8 of 9 all came in red, the only green sector you might guess was the defensive, Flight to safety Utilities which were up +0.68% on the day.
AA's earnings beat after market also contributed to a firmer tone as Index futures were largely flat overnight (until just a bit ago) even as Asia was in the red as China's PPI came in printing the 28th consecutive contraction and Consumer Prices missed as well. This sent the Hang Seng down -1.55% which puts it in bed with the SShanghai Composite and the Nikkei as it has now lost all gains YTD (-.056% with the Shanghai Comp -3.66% and Nikkei -6.07% YTD).
Europe is trading with a mixed tone which has improved recently the last hour or so with US futures, at last look FTSE -0.31%, DAX +0.07% and CAC-40 -0.07%.
Treasury Futures were in a large range with a slight negative bias overnight, but have started selling off more aggressively the last hour as the USD/JPY and US Index futures have gained ground.
It's not surprising Treasury Futures are selling off as the last 10 consecutive F_O_M_C minutes' release has seen 10 year yields climb.
Crude is accelerating losses on the downside it had already been seeing overnight with Bent Crude now down 7-days in a row and 12 of the last 14 and WTI down 10 of the last 12.
Gold and Silver were up overnight.
The Minutes are released at 2 p.m. if they weren't already leaked, judging by yesterday's trade activity, I'd guess they were leaked, which may have me reconsidering some positions I was considering such as NUGT, I'm thinking it may see a head fake move through resistance and then a pullback, but I'll wait to see if that happens and what underlying trade looks like if it does.
This is now the 56th consecutive day the SPX has gone without a move (plus or minus) of 1%, a record not seen since the early 1990's.
As usual on any F_E_D event day, watch out for the knee jerk reaction. If the minutes were leaked (and I say this because the F_E_D was caught red-handed leaking them about a year ago almost 2 days in advance), then our bounce scenario would be the knee jerk reaction and that's why we would have seen the positive intraday divergences yesterday and should see them today, the resolution of the knee jerk would be to retrace the move and head lower which fits nearly perfectly with the macro theme presented last night in the momo stocks, short in to strength as almost all are in large tops that are at or near one of the best entries with lowest risk and great timing.
We will of course confirm that and let the market tell us, it's just a theory based on what I've seen.
Have a great Wednesday.
It's F_O_M_C Minutes
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