Stocks rallied today to end a 5 trading day losing streak. Leading the way were retailers with $WMT, $M, and $JCP soaring higher. $BIG, $Z, and $CMG also rocketed higher, erasing what had been a terrible start to 2015. Is today's action indicative of what we will see going forward? Is that V bottom coming?
It was a constructive day for stocks and below I'll share my thoughts on what I think is going to happen in the short term, but first I'll finish with today's recap.
The $PCLN put private tweet for the $1075 strike hit $20 from $1 earlier in the week.
$BITA came though in a nice way as the stock rallied over 10% today.
Those calls closed over $2.50 today and have another week of time on them.
They key to resolving the growing crisis in Europe is to have Germany's support. Before the markets opened for trade in the United States the headlines were telling you that Germany wasn't going to help Greece.
And then hours later, smack in the middle of the trading session Germany miraculously changed their minds. Stock futures soared on the news.
These wild swings in the market are not very bullish. It highlights the uncertainty and when there is uncertainty investors usually sell first and ask questions later.
If you read yesterday's recap you know I was looking for a stabilization for crude oil, a leveling off of the U.S. dollar and for bonds to settle down.
$USO settled down today and looks to be forming support for a rally back up to $20.
Bonds and the US Dollar were volatile after the FED minutes, but did not take out any of the recent highs.
The S&P 500 had another wild ride, but ended the session close to the highs. I think tomorrows session will be key for the direction of the market into February. Are we going to see that V bottom? If not is a recovery coming or was today just a bounce to relieve oversold conditions?
How about tech?
$TWTR got crushed today as the Icahn rumors of yesterday turned out to be premature.
The stock is still up to start 2015, and I think its headed over $40 in the coming weeks.
$QQQ held the line at $100 again this week, just like in December.
If this was 2014 and the market just posted a sharp reversal, the odds of a strong continuation would be great. But it's a new year. The price of crude oil has crashed. I'm not sure anyone knows with 100% certainty what this means for the stock market in 2015. At some point expenses will get cut, jobs will be lost, and bonds will default. On the other side of the coin, the consumer, at least those that consume oil and related products, will receive a massive stimulus via lower prices.
The stock market today was telling you, via the moves in some big retailers, like $WMT and $HD, that for now the consumer matters most. I'm not so sure we'll be seeing the same thing 6-9 months from now when energy bonds default, companies go belly up, and balance sheets see equity go up in smoke. If you are trading the short term, I like the odds of a continuation, but its a good idea to remain cautious. It is a New Year, and perhaps, as JB was saying earlier today, it's a different environment, and the V bottoms of the past are just that... in the past.