A sharp late day rally left stocks off their lows, or OTL, which seems to be the theme in 2015. Yesteryday's reversal almost brought stocks back into positive territory, today's snap back could only turn today's losses from large one's into modest ones.
It's already been a volatile week full of wild prices swings and collapses, including copper, which was down some 7%+ last night before recovering some of its losses and ending.... you guessed it... Off The Lows or OTL.
Coming into 2015 I was expecting the market to reach and surpass the late December 212.97 $SPY price paint level. I still think that move is coming, but we have to look at this market's wild price action as a clue that something is rotting at the core. While the theme may be off the lows, the rips to the upside are also getting sold off. What you are getting is rapid descents followed by neck cracking reversals. If you are trading these short term price swings you need to remain nimble.
Look at the intra-day action today after the gap down open:
The snap back rally was even more stunning than the sell-off to session lows.
The VIX was up near 5% at the close and remains over the key 20 figure:
The big story today was the reversal in Crude oil having its best day since June 2012. The chat room was over the calls today:
Earnings from the banks are coming in and so far the market isn't liking them. $JPM got creamed today after reporting earnings prior to the open.
Banks have been strong, but this decline below long term support does not bode well for $JPM.
Last nights copper crash brought interest back in, as copper has long been a proxy for the health of the world economy... which is why its known as "Dr. Copper".
Yesterday I said to expect volatility today. Yeah... I nailed it :-).
I think I've said it a few times already in previous 2015 recap, but I'll say it again....tomorrow.... drum roll please..... in the voice of a well renowned market commentator from a once popular business news program......expect more volatility. There... you have it. I guess I could have drawn one of those charts that have both an up and a down arrow on it. But then the market would be back to trading flat again.... and no one likes a flat market....never
I think tonights after hour news with Adobe spells out why this market continues to trade higher. Stock buy backs. Adobe is up 2% after hours after announcing another $2 billion in share buy backs.
I do think that these rips and dips are indicative of a market of the cusp of something big, and I think that "BIG" could a be a 10-15% correction from current prices. I will remain nimble in any positions I open until we start to see either a stabilization in the US Dollar, Crude, and Bonds... in which case I will go back to buying calls. However if this market keeps moving in a violent fashion I will continue to enter positions to capitalize on a possible sharp correction from current levels.
What also has me concerned is the $QQQ. While the $100 level held again today, we are seeing lower lows, and I think the next $100 test will finally break support. Keep the $QQQ near and dear as I think the $100 break will be the signal that a real correction is coming.
Have a great evening.
Bright and early in the chat room tomorrow, its sure to be another 'volatile' day.