The most impressive thing about the market action today is how well the indices are holding up despite the warning issued by Broadcom (AVGO) . AVGO is down 6.4% on the news and the VanEck Vectors Semiconductor exchange-traded fund (SMH) has taken 2.7% hit, but both the S&P 500 and Dow Jones Industrial Average are suffering only minor losses.
Breadth is poor as it approaches two-to-one negative and we see 175 new 12-month highs to 120 new 12-month lows. So, broader weakness is here today, but interest continues in the recent initial public offerings. Chewy (CHWY) is trading strongly out of the gate, but suffering some quick flipping into the strength. Other IPOs like Beyond (BYND) , Revolve (RVLV) and Fiverr (FVRR) are still very active, and I am looking for high volatility to continue next week.
The good news about this action is that it has been a trading-range all week, and that is helping quite a few charts to develop nicely. There is some much-needed consolidation taking place and stock picking has been reward a bit more as technical patterns work. The IPO market proves a high level of speculative interest still exists.
This market is not trading like it is worried about the negative narrative of slowing economic growth, trade wars and political problems.
The Fed meets on June 18 and 19, and issues its interest-rate decision. The odds of a hike have been increasing, but still seem unlikely. The policy statement will be key, and there is always the chance for a surprise.
Optimism about the Fed is helping keep the market in a trading range this week, but it will likely be the catalyst for a trend-move when it makes it's decision next Wednesday afternoon.
I'm finding some decent trades in stocks like Avadel (AVDL) , Kirkland Lake (KL) and the hot IPOs, but it is still hard to put any sizable amount of capital to work.