The strong earnings report from Apple (AAPL) has the indices in the green but it isn't creating much momentum. Breadth is running 3700 gainers to 2700 decliners and there are over 270 new highs, but that is mild for a market in which the indices are hitting new all-time highs.
Part of the issue today is that many market players are not inclined to make big moves in front of the Fed announcement this afternoon. The market is always a bit dull in front of the event so its not surprising that there is some fading this morning.
My biggest concern about the market is the narrowness of the strength. Apple is obviously leading and there are other interesting gainers like Nu Skin (NUS) , Nanometrics (NANO) and Rogers (ROG) , but small caps are mixed, biotechnology is weak again and some of the more speculative stuff is lackluster.
I believe the risk of a negative reaction to the Fed this afternoon is higher than usual. The market seems to be anticipating that the current level of dovishness will continue but after the GDP report last week I am expecting Jerome Powell to be just a touch more hawkish.
Goldman Sachs (GS) believes that the Fed's next move is more likely to be a hike than a cut but that is not what is priced into the market currently. This disconnect presents the foundation for some fireworks this afternoon if Dr. Powell hints that maybe Goldman is right. Be ready for some sharp moves.
I'm a net seller again today and now have over 50% cash on hand.
(Apple and Goldman Sachs are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AAPL? Learn more now.)
