The Fed looks caught between a rock and a hard place.
In one breath, some Fed officials are discussing faster-than-anticipated jumps, while in the next, they are outlining that interest rates need to remain low. How much of this is transitory remains to be seen. One thing not remaining to be seen is pent-up demand.
Have you traveled lately? I've been through a half dozen airports in the past six weeks, and there is no lack of passengers. Every flight has been essentially sold out, wait lines for checking bags or getting through non pre-check security points have been lengthy, sometimes insanely long.
Or maybe, have you tried eating out? I know that in both Austin and Nashville, if you don't have dinner reservations at any place even half-decent, then you aren't getting in on a weekend. Maybe we aren't mobbing the malls, but people seem to be getting out to live their "best" lives.
The good news is equities are shaking off the Fed double-speak right now, even if stocks look a little toppy based on the intraday action. That's not to say there aren't some intriguing setups out there among well-known names.
For instance, Chipotle Mexican Grill ( CMG) , already 10% above its May bottom, appears to be breaking out to a new leg higher Monday. Shares have pushed above the 50-day simple moving average (SMA) with bullish divergences in the moving average convergence/divergence and Full Stochastics offering a leading step. This could have another $50 to $70 in it before taking a pause. Bulls need to hold $1,390 though, so a fairly tight stop can be used if playing long.
Mastercard ( MA) looks on the verge of breaking out. A close above $374 would go a long way toward giving this one the kick in the tail it needs to tack on a quick $10. I like that we're seeing the Full Stochastics and MACD break to new highs in advance of price. Also, a close above the 50-day SMA should be a positive. Should MA work its way lower, the $362.50 level is the one to watch. A break below and shares could free fall. On the upside, I do think the $385 area is doable here.
Maybe I should be more comfortable with indexes near highs, but I feel like today may be more of a bounce in the small caps and S&P 500 as a reflex to the past four to five days of heading lower. I wouldn't call it a dead cat bounce, but I'm not sold on it yet in terms of continued upside beyond today.
