A late day spike-o-thon was the exclamation point on a strong day for the stock market. It didn't look that way early on as a terrible ISM number, the worst since 2009 did little to dissuade investors from buying stocks.
The initial reaction was heavy selling, but that soon abated and by the end of the session investors were rushing to buy everything that wasn't nailed down.
There also was a rush to cover some of the more heavily shorted names of 2015.
$SCTY has taken it on the chin recently and early buying morphed into a bull rush as the stock moved some 10% higher.
Solarcity was on the radar for a move higher.
$VRX also had a similar trade day as the stock moved ever closer to getting back over the $100 level.
$VRX was on the morning watchlist for a potential move higher.
Both trades where a great way to start December. $TSLA, $FSLR, $FB, all rocketed higher today as well. $AMZN neared a new record high. The FANG family was strong to open the last month of 2015.
We have the biggest FED meeting in the history of the world this month. Some are nervous about a possible rate hike including Chicago FED president Evans.
His main concern is inflation. I agree. But 6+ years of unprecedented central bank policy, including zero interest rate policy, has not done enough to stoke the smoking embers of inflation.
It doesn't help the the US Dollar index is pushing some 12+ year highs. A rate hike by the FED will only exacerbate the US Dollar strength issue, and it will be something that could derail the 6+ year bull market for stocks.
Yesterday the market was pricing in a 77% chance of a rate hike, this morning that figure hit near 80% before the ISM number took the odds down to 75% at the closing bell.
On December 16th there is a 75% chance the FED will raise the funds rate for the first time since the industrial revolution.
From the CME:
Again the US Dollar strength is something to be concerned about. With every other Central Bank in the world still doling out Kool Aid by the KEG there is no place to go but up for the US Dollar index.
It remains on the cusp of a breakout to finish 2015.
It seems the stock market is just biding time. Shorts are covering and locking in their profits before year end. The VIX continues to drift lower. World events , terrorism, military conflicts, and as we saw today, terrible economic data, are shrugged off in favor of the one thing that has worked since the lows in March 2009. Buying the dip.
Heading into the Dec 16 FED meeting I think the market will grind higher. We may even see new highs on $SPY and $QQQ. $IWM is one to watch for a break and hold over $120. Even today it lagged the overall market strength.
I will also be watching some of the beaten down retail.
Stocks I will be looking to buy calls for $WMT $TGT $M $LULU $URBN $KSS to name a few.
Enjoy the rest of your Tuesday and see you tomorrow in the chat room.