Market Alert - The Close

It took 5 days, but Wednesday SP500 finally recovered all that it lost the prior Wednesday. Yes, 5 days to recapture 1 day. Nonetheless, SP500 notched an ever so narrow new closing high, but it was a new high, the first post-Wednesday new high for the major indices.

Crappy earnings from LOW (top line, bottom line misses), TIF (top line), and AAP (top, bottom) tried to undermine the move, but they failed. Terrible existing home sales for April (-2.3% down from a downward revision to March to 4.4% after February's -3.7%) did not stop the move, though a lot of the weakness is due to inventories at a 4.2 month supply versus 6 months considered balanced market.

The FOMC minutes did not stop the move. The minutes show a 'cat-dog' FOMC with some members believing the Q1 slowdown is transitory (the Fed LOVES that word) while some need additional 'evidence' showing it was transitory before further tightening. The minutes noted some bubble-like symptoms, but of course did not use that kind of language. No, the transparent Fed used language no one but a tax lawyer could love (or understand):

". . . asset valuation pressures in some markets were notable. Although these assessments were unchanged from January's assessment, vulnerabilities appeared to have increased for asset valuation pressures, though not by enough to warrant raising the assessment of these vulnerabilities to elevated."

What the hell? Prices too high? Just look too high? Again, what the hell?

In any event, stocks appeared to take heart after the FOMC minutes as SPY jumped to a session high and closed even higher than that first spike to a higher session high. Again, good enough for a SP500 new closing high.

SP500 5.97, 0.25%
NASDAQ 24.31, 0.40%
DJ30 74.51, 0.36%
SP400 0.27%
RUTX 0.11%
SOX 0.65%

VOLUME: NYSE +4%, NASDAQ -2%.

A/D: NYSE 1.3:1, NASDAQ 1.1:1

Okay, okay. The details. The move was not that great in itself. Volume was decent, moving back up near average on NYSE. Breadth was putrid. It was a new high, but by the skin of its teeth.

Further, the other indices were not tearing to their own new highs. NASDAQ and SOX were darn close, but after 5 sessions, no cigar.

Thus the recovery, while impressively higher 5 straight sessions, found just one index moving back over the pre-Wednesday highs. Dogged determination in recovering, but not powering higher and blowing away the old highs. Of course, it doesn't have to. It just has to keep chugging upside as it has done in the intervening week, something that is more the market's style. The PPTeam averted the sharp selloff, and now the market is making its progress back to new highs.

That said, the indices are still at the prior high, still looking to move through, still likely to pause before continuing. Looking at the NASDAQ chart it would be nice to see a pause, a hold, then a surge back upside to higher highs.

Leadership was okay. AMZN, GOOG, some big chips, moved higher, some stalled similar to the indices: not falling, just sluggish at this level.

On the day we licked some STMP gain and bought some FB and LMAT. SOHU had a hiccup so we closed the rest of the position and will see if it gives us a new good entry. The indices still have their resistance ahead, still have to prove they can make it through, but thus far they have not faltered.

Have a great evening!

Jon Johnson, Chief Market Strategist
InvestmentHouse.com
______________________________________
Alert Key
http://www.investmenthouse.com/alertkey.htm

PLEASE DO NOT REPLY TO THIS EMAIL. USE THE CONTACT US PAGE ON OUR WEBSITE.

Customer Support: http://investmenthouse.com/contact_us.php