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Markets continued to trade quietly on lower volume as traders focus on the FOMC announcement due tomorrow afternoon. SPX gained $4 to close at $2092, but RUT gained $13, closing at $1151. Volatility was flat with the VIX virtually unchanged at 14%. Trading volume remains below the 50 day moving averages (dma), but rose a bit today with 2.2 billion shares of the S&P 500 stocks trading. Trading volume rose 7% on the NYSE and rose 15% on NASDAQ.

Markets are holding up rather well as the uncertainty of the Fed's actions weigh on traders. That tells me the general mood remains bullish. Absent a surprise from the Fed tomorrow, we are probably headed higher once again.

Durable goods orders came in higher by 0.8% in March, a big improvement from February's 3.1% decline that spooked the markets. The Case Schiller housing price survey continues to post annualized price increases above 5%, with 5.4% for February. The real estate market may not be booming, but it isn't declining. The Conference Board's consumer confidence survey reported at 94.2 for April, down a bit from March's 96.1.

Members of my trading group sold a weekly iron condor on CMG today in advance of the earnings announcement this evening. Based on after hours trading, this trade looks like it may gain 35% or more tomorrow. Join us at our next meeting on May 5th.

Trading volume dropped off significantly today with two billion shares of the S&P 500 stocks trading, well below the 50 dma at 2.5B. Trading dropped 10% on the NYSE and declined 22% on NASDAQ. SPX traded as low as $2078 before recovering to close at $2088, down $4 on the day. Today's trading reinforced the $2080 level as support for SPX. RUT fell nine dollars to $1138. Volatility rose a full percentage point with the VIX closing at 14.1%. This is probably due to additional hedging ahead of the Fed announcement Wednesday.

New home sales dropped from an annualized rate of 519 thousand in February to 511 thousand for March. Real estate isn't booming, but it is far healthier than many sectors of the economy.

Will the FOMC raise interest rates at this meeting? Or will they use this announcement to prepare the market for an interest rate hike in June? In either case, we may see the market pull back in reaction. Much of the downside push in January came from the silly analysis that suggested four rate hikes in 2016 (I say "silly" because those analysts drew that conclusion from the economic projections for the next 12 months made by committee members. Since when do we take economic forecasts seriously?)

The FOMC meeting begins tomorrow but the announcement won't come out until Wednesday afternoon. I would be surprised if we see much trading volume or price movement tomorrow. Traders will probably just be waiting on the Fed...


Fresh from filing my tax return, I am greeted by an article today telling me 45% of Americans pay zero taxes. Is that their fair share?

Markets appear to be slowing as they enter the neighborhood of all-time highs. SPX continued to rise today, tacking on $6 to close at $2101. RUT only gained a dollar, closing at $1140. NASDAQ lost $20 to close at $4940. Trading volumes picked up with 2.3 billion shares of the S&P 500 companies trading today. Trading volume rose 6% on the NYSE and also rose 9% on NASDAQ. Trading volumes on SPX and the NASDAQ Composite remain below the 50 dma.

Housing starts came in at an annualized rate of 1089k for March, almost flat with February's 1194k. Building permits were right in line with 1086k, up from February's 1177k.

Passover begins Friday evening and the markets have historically softened just before Passover, according to the Stock Traders Almanac. Perhaps a large number of traders close positions to take their profits before taking off for the holiday.

So far, the markets have chosen to ignore most of the bad news coming out of the earnings announcements, but that may not last long. We also have a FOMC meeting coming next week. That may start to give traders pause.


March was a very strong month for the markets, and many bulls argued the trend would continue and new highs were soon to be achieved. But the markets have slowed as they approached the recent highs from December. SPX closed today at $2081, down $2 and RUT closed up $2 at $1131.

The recent highs in SPX were $2078 on 12/29, $2103 on 12/1, and $2110 on 11/3. Contrary to much of the hoopla in the financial press, SPX has barely reached the late December highs and appears to be losing its momentum. Thus far in this earnings season, earnings declines from year over year comparisons have been ignored. Bad news is good news. I don't see economic data worthy of recession fears, but I don't see booming economic data either.

Trading volume was modestly higher today, surprising for an option expiration Friday. Trading in the S&P 500 came in at 2.1 billion shares, remaining well off the 50 dma. Trading volume rose 4% on the NYSE and rose 2% on NASDAQ.

Volatility was largely unchanged with the VIX at 13.6% (down a tenth of a point).

The Empire manufacturing survey moved up in April to 9.6 from last month's 0.6. Industrial production continued to decline in March, down 0.6%, after declining 0.6% in February. Capacity utilization declined a bit to 74.8% for March, down from 75.3% in February.

SPX settled at $2083.83 today. RUT still had not posted its settlement price as I write this blog. You may download a spreadsheet of SPX and RUT settlement prices in the downloads section of my web site.

Data point for defunct bureaucracies: A friend of mine appealed a mistake in her property tax assessment and the tax assessor said she would have to wait for her refund until the next installment of taxes are paid in June because they are out of money...

I am going to mow the lawn for the first time this season this weekend. I know, I know. You've been mowing for a month already. We can't afford to grow grass here in Illinois.

J.P. Morgan reported lower earnings this morning, but the picture wasn't as bad as analysts expected, so JPM traded higher and led the market higher. Analysts have been predicting lower earnings for the first quarter for the past several weeks, and JPM seemed to deliver on that prediction. But the bulls are determined to see the glass half full, so bad news became good news.

SPX gained $21 to close at $2081. RUT also traded higher, with a close at $1130, up $24. The VIX dropped a full point to 13.9%. Trading volume was up slightly with 2.5 billion shares of the S&P 500 stocks trading today, but remains below the 50 dma at 2.6B.

The Producer Price Index (PPI) reported a slight decline (-0.1%) for March, close to last month's -0.2%. Retail sales declined 0.3% in March. One of the mysteries of lower gas prices has been how little of that bonus has shown up in retail sales. Perhaps consumers are saving money for a rainy day?

Earnings reports for the banks continue tomorrow with several notable names including Bank of America and Wells Fargo. CitiGroup follows on Friday. Will the market continue to shrug off declining earnings and mediocre economic data? Maybe this is the bull market "climbing the wall of worry?"

The markets opened lower this morning but then bounced higher with SPX tacking on twenty dollars to close at $2062. RUT gained $11 to $1106. Volatility retreated with the VIX closing down 1.4 points to 14.9%. Trading volume popped higher with 2.4 billion shares of the S&P 500 companies trading. Trading volume on the NYSE rose 19% and volume rose 15% on NASDAQ.

No significant economic data was reported today. The Fed's beige book (minutes from the last meeting) will be issued tomorrow afternoon. Those minutes could be market moving, depending on the recorded discussions. Analysts are looking for clues for the timing of the next interest rate hike.

Even with today's large move, the trend of SPX remains sideways. A break above $2075 would be necessary to start to take the bulls' case seriously. I fail to see the economic data to make the case for a strong bull market. But the market could trade higher on the back of the Fed. That is why the beige book release is potentially significant.

J. P. Morgan reports earnings tomorrow morning. That could set the tone for the market opening tomorrow, but then the beige book takes over in the afternoon.

Markets hesitated today as Alcoa was set to kick off this earning season. SPX opened higher but couldn't hold the highs and closed down $6 at $2042. RUT lost $3 to $1094. Volatility rose about one full point with the VIX closing at 16.2%. Trading volume was basically flat with 2.1 billion shares of the S&P 500 trading today. Trading volume rose 7% on the NYSE, but fell 3% on NASDAQ.

Alcoa (AA) beat analyst earnings estimates but missed sales estimates, so shares were lower in after hours trading. Traders often watch AA for a guage of basic industrial strength. The big banks report later this week and will be watched for additional clues of overall economic strength. Analysts' earnings estimates have been revised downward significantly more than usual as the first quarter progressed, so more attention than usual is being paid to the sales and earnings data as well as the outlooks for the next quarter for the blue chip stocks.

Several members of the FOMC are speaking this week in advance of the beige book being released Wednesday. I am unsure all of this increased transparency is good for the markets. It seems to contribute to the daily price volatility.

If earnings do come in lower this quarter as analysts have predicted, today's market weakness may be the new normal for several weeks.

Several reports of the decline of first quarter earnings have been receiving a lot of attention on Wall Street. FactSet summarized the changes of analyst earnings estimates for companies in the S&P 500 for the first quarter of 2016. The aggregation of the earnings estimates for all the companies in the index dropped by 9.6% during this period. By comparison, the average decline in quarterly earnings estimates over the past 10 years is 5.3%. Analysts don’t like what they are seeing in 2016 and this began to weigh on the market in this week's trading. SPX dropped $21 to close at $2045 and RUT lost $13, closing at $1096. Volatility rose with the VIX closing up 1.3 points to 15.4%.

Trading volume rose today with 2.5 billion shares of the S&P 500 companies trading. Trading volume rose 15% on the NYSE but was nearly flat on NASDAQ (up 0.4%).

The ISM services index came in at 54.5 for March, up from 53.4. JOLTS job openings dropped slightly in February, from 5.604 million to 5.445 million.

An article in IBD today speculated that the high tech sector may be particularly hard hit in this earnings season. FactSet's report issued last week, but that story is gaining visibility and worrying traders. All of the craziness of the presidential primaries probably isn't helping either.

The markets were subdued today, probably due to many traders taking an extended long weekend. The fact that markets remained closed in Europe may have influenced those decisions. SPX closed at $2037, up one dollar. RUT also closed up one dollar at $1073. Volatility rose a half point to 15.2%. Trading volume reflected the small market gains with only 1.7 billion shares of the S&P 500 stocks trading today. Trading dropped 17% on the NYSE and declined 12% on NASDAQ.

Pending home sales were encouraging, increasing 3.5% in February, a big improvement over January's 3.0% decline.

The balance of the week is loaded with economic data: Case Schiller housing prices, ADP private payrolls, Chicago PMI, ISM manufacturing index,  and construction spending. And the week ends with the jobs report, aka, the non-farm payrolls report.

Until tomorrow...

We had become accustomed to higher prices every day, but it had to slow down eventually. Yesterday's market shook off the Brussels attack, but pulled back a bit today for no apparent reason. SPX closed down $13 to $2037 and RUT gave up $22 to close at $1076. Volatility rose almost one point with the VIX at 14.9%. Trading volume was up slightly with 2.1 billion shares of the S&P 500 companies trading. Trading on the NYSE rose 8% and trading volume was up 11% on NASDAQ.

New home sales came in at 512 thousand for February (annualized); this is a small increase from January's 502k.

The 200 dma at $2017 should act as support for the SPX. The resistance level at $2050 has now been reinforced; it will be even harder to break through next time. RUT is back in the neighborhood of the August flash crash retest. Earlier this month, RUT thrashed in this area for about two weeks and never did break through the August flash crash levels at about $1105. We may be caught in this choppy market for a while.