Morning Market Thoughts

Good morning. First, a reminder that we’ll be holding a training class at noon ET, 9 am PT today. The stock market is, in my view, has some risk that is easily overlooked. The S&P, Dow Jones Industrial Average and the Nasdaq Composite are both trading at levels seen on February 21st — almost a month ago. The S&P and Dow 30 are both slightly above those levels, and the Nasdaq Composite is just slightly below those levels. So it’s safe to say that these important indexes have been sluggish, or “resting.”

At the same time, the Dow Jones Transportation Average, the Midcap Index and the Small Cap Index are all markedly lower. So what we’re seeing is a softening of the market that you wouldn’t see if all you looked at was the S&P 500.

My point is simple: Just be careful about buying aggressively at these levels. The market is likely to be a bit choppy today, and the chop will start at 2 pm, when the Fed releases its statement about interest rates. No sense in my handicapping it for you. That’s a pretty noisy space already. Let’s just focus on what happens to the banks and housing stocks. Both the $DJUSBK (banking index) and the XHB (homebuilder ETF) have been doing quite well. A favorable response in these sectors to the Fed’s policy announcement would be good for the entire market. On the other hand (and there’s always another hand), a selloff in the banks and homies could ultimately lead to a lower risk entry on many stocks as we approach the April earnings season.

Lots of “if’s” and “maybes” in stocks right now. Plenty of stocks are working. Just make sure that your definition of “working” does not include “hope” or “if only”….

A few stocks that I’m watching are BABA (still waiting for a definitive verdict in the $105 breakout), Netflix (NFLX) (still needing a couple of bucks before it tests resistance, and Clovis Oncology (CLVS) (positive results in Astrazeneca (AZN)’s oncology drug bodes well for Clovis, and not so much for Tesaro (TSRO).

See you at noon ET.

Dan

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