U.S. markets traded higher throughout the session with the major indexes, excluding the small-caps hitting fresh all-time highs ahead of the Fed news.
The action afterwards was a little choppy as the broader market pulled back of its peak with the small-caps adding to their losses on news interest rates remained unchanged.
Global Economy –European markets closed higher for the second-straight session with the Stoxx Europe 600 rising 0.5%. The DAX 30gained 0.3% while the FTSE 100 was up 0.2%. France’s CAC 40 index climbed 0.6%.
Asian markets rebounded on Wednesday following the continued rise in oil and commodities.
Australian stocks, where a big market segment is mining and energy companies, rallied with Australia’s S&P/ASX 200 rising 0.9%.
Hong Kong’s Hang Seng Index rose 0.3% and has posted gains in 12 of the past 13 sessions. Japan’s Nikkei Stock Average ended a three-session slide and was higher by 0.3% while China’s Shanghai index advanced 0.2%. South Korea’s Kospi index slipped 0.2%.
U.S. Economy-MBA Mortgage Applications Composite Index up 0.4% for the week ending July 21.
June New Home Sales climbed 0.8% to 610,000 but fell shy of forecasts for 611,000.
Market Sentiment-The Federal Reserve decided to leave the benchmark interest rate unchanged as the Federal Funds Rate stayed at 1.00%-1.25% versus consensus of 1.125%.
The Fed gave no firm date on unwinding its balance sheet but the policy statement did indicate the run-off would begin relatively soon, versus this year in the June statement.
The decision was unanimous as the Fed said the economy has been rising moderately while job gains have been solid. On inflation, the Fed said overall and core prices have declined and are running below 2%. Overall, there weren’t any surprises in the statement.
The iShares 20+ Year Treasury Bond ETF (TLT) tested to a low of $123.08 ahead of the Fed news with upper support at $123-$122.50 holding.
The rebound to $124.09 cleared fresh resistance at $124-$124.50 and the 50-day moving average but levels that failed to hold into the closing bell.
Market Analysis-The Spider Dow Jones Industrial Average ETF (DIA) traded to a record peak of $217.16 shortly after the opening bell while closing above the $216.50 level.
This was a bullish development as this area served as prior resistance and keeps open the possibility of a run towards $218-$220. Support is at $216-$215.50.
The Spider S&P Aerospace & Defense ETF (XAR) pulled back off its recent all-time high of $74.16 with fresh resistance at $74-$74.50 holding on the open.
The late June surge off the 50-day moving average has current support at $73.25-$73. A move below $72 would signal a short-term top and momentum has slowed.
Existing / New Position Update
Apple is moving slightly higher and I’m waiting for corrective pressure to move into the market to initiate more trades. At the present time the number of stocks trading above the 50 day line and the 200 day line is increasingly is showing evidence of major overbought price conditions and RSI is confirming same.
I’m targeting several stocks that are starting to descend, but patience is key since none are near our high velocity pullback zone level yet.
All the best,