The indices had a slow but benign start following the long weekend but a weaker-than-expected ISM Services report is causing some problems. This is the second weak data point since Janet Yellen's hawkish speech at Jackson Hole a little over a week ago. We had the poor jobs news on Friday and now this news.
In the past any news that would prevent interest-rate hikes was generally viewed as a positive but this market is growing weary of the very tepid economic recovery and is not reacting favorably this morning. Simply delaying rate hikes isn't much comfort when worries about another recession start to pop up.
Part of the reason the Fed has been anxious to hike rates is that it then will have some ammunition if the economy weakens further. But it never improves in the first place it just highlights how ineffectual the Fed policies have been.
As I discussed in my opening post the setup for the bears is quite good but they need a catalyst and are hoping that the catalyst is lack of confidence in the central bankers. That is what we are seeing this morning, so now the bigger question is whether the bears can pick up the ball and run with it for a while.
I've been a net seller so far this morning. Overall, individual stocks on my screens are still acting OK but I'm inclined to sell those down that aren't doing much.
Action Alerts PLUS holding Facebook (FB) is my favorite big-cap right now and it continues to develop well. NetEase (NTES) , a recent Stock of the Week, is breaking out nicely. Comstock Resources (CRK) my play on oil, is developing well. My Stock of the Week Shopify (SHOP) is pushing to new high territory. I am still looking for entries in TPI Composites (TPIC) and Airgain (AIRG) .
Meanwhile, precious metals are heating up again, which is a sign that this market is writing off the Fed hawkishness once again. One small gold miner on my radar is McEwen Mining (MUX) .
While overall price action is a little worrisome there hasn't been any real technical damage done so far.