As if the market did not have enough issues, including the 'that's it?' GOP memo, the Fed's Kaplan emptied both barrels at the market, saying if the Fed waits for inflation it is too late, tax cuts could cause an over-leveraged condition, and that the base case for rate hikes is 3 in 2018 and there could be more.
The DJ30 of course was already down 300ish points. Kaplan's comments kicked the chair out from under it and at the low was down 644 points.
SP500 -55.68, -1.97%
NASDAQ -125.55, -1.70%
DJ30 -611.25, -2.33%
SP400 -1.84%
RUTX -1.79%
SOX -2.35%
There is a natural reflex bounce right now and stocks started to come back some at the top of the hour, but that is a fly on an elephant in terms of the losses. DJ30 tapped at the 61% Fib retracement of the January leg on the low. that is a very generous read if only using the last leg of this run. You really have to go back to September, and those levels get kind of creepy. The 38% retracement of that move is at 24,833, pretty much ALL of the January run.
In any event, not interested in bottom fishing today and now running the traps to see how any remaining positions are holding, if want to bank some more upside on some, etc. The first two days of a week after this kind of finish can be ugly with uppercase letters. So, looking to see what we want to hold or not.
Oh, and now the wire is saying Trump says perhaps no DACA deal by 3/5. Art of the Deal at work, but the market is thin-skinned right now.
Jon Johnson, Chief Market Strategist
InvestmentHouse.com
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