Positive responses to big-cap earnings news from Boeing (BA) , Apple (AAPL) , McDonald's (MCD) and KLA-Tencor (KLAC) have the senior indices in the green, but small-caps are lagging badly and there isn't any upside follow through so far.
Breadth is positive at around 3,700 gainers to 2,900 decliners, but the Russell 2000 ETF (IWM) is down slightly. The Dow is acting the best of the major indices because of the heavy weightings of Boeing, Apple and McDonald's although the "coattails" are weak and the positive action there is not acting as leadership for the broader market.
Typically, the market trades rather quietly in front of a Fed interest-rate decision and that may keep the action contained to some level. However, there is a lot of grumbling that the positive response to earnings that were recently cut is not justified.
I took one quick short side trade in Apple and will be looking for another as the views of analysts were very mixed and there were no price target increases for the first time in a while. Low expectations are the reason that Apple popped but those expectations have already shifted and will make further upside much more difficult.
On the small-cap front Nio, Inc. (NIO) , the Chinese maker of electric cars, is up following a debt deal to raise substantial capital. This removes an obstacle and helps to set the stage for quick growth. The stock is back over its 50-day simple moving average and is cutting through some technical resistance up to $8.
While there are plenty of bulls celebrating last night's earnings, results have generally been lackluster so far. We have more reports this week, but it is low expectations that are helping the price action and that doesn't make for a lasting catalyst.
The Fed is on deck. Be ready for some volatility.