The NASDAQ and the S&P 500 closed with solid gains if you’re looking at the market from the outside. But if you’re looking inside the numbers of what happened, here’s the story. The NASDAQ closed up 451 points or 2.64%, to 17,599; volume was very good to the buy side, increasing approximately 34%. The S&P 500 was up 85 points or 1.58% Average daily volume also increased substantially to the buy side. Looking from the outside in, and the pundits on TV, that sounds great. But in my opinion, this was nothing more than a relief rally for extremely oversold conditions and short covering. So don’t get excited! This is the first rally in almost 3 weeks where the volume was good to the buy side on the NASDAQ, and the first rally on higher volume on the S&P 500 on higher volume in over 2 weeks. It was Federal Reserve interest rate policy day and shorts normally run scared on this day (uncertainty) and cover. A week ago, I wrote, that I don’t see the NASDAQ closing above 18,130 or the S&P 500 closing above 5,565 in the next 90 days and maybe more. And I hold firm to that. If you own large mega-cap stocks and are not a long-term investor, the time to get out was when I warned you over 1000 points ago. And if you’re stubborn, you have another chance. You’re getting a second opportunity. Don’t say I should have gotten out, because that never made anyone any money.
Microsoft was the second Mega Cap casualty today. The company beat on both top and bottom line numbers yet the stock was down on the lame media excuse because their Azure unit revenue was off by 1% of projections. (no big deal for now.) And historically, this is Microsoft’s most difficult quarter. HELLO!!!!! The stock was not down as the media suggested (Azure revenue miss). It was down because this is sell on the news (take profits season)
Meta came out with earnings as I wrote this. In after-hours trading, it is currently up almost 32 dollars to almost 507. They blew away numbers on both the top and bottom lines and gave great projections.
I will go out on a limb and guess that META will close tomorrow closer to today’s close of 475 than the nearly 507 it is currently trading at. It would not surprise me if it closed below 475.
Why, you might ask? Because this seems to be a sell-on-the-news earning season.
Today’s Small Cap Russell 2000
The Russell 2000 closed 2,254 up 11.34 or +0.51%. On the outside, looking in, it also looks good. But from the inside out, I’m not sure. Although it’s just one trading day, I expected a larger move on the small-cap market simply because it was Federal Reserve Interest Rate Day and everyone is talking and hoping rates go lower.
I listened to Powell’s statement, and what scares me is one blip in the reading before the September meeting, which I think would put him in a holding pattern and not lower rates. In my opinion, that’s why the Russell 2000 dropped over 40 points after his news conference. It’s time to be careful.
The Fed (Powell) has a tough job, but being data-dependent on one bad reading puts him being reactive (to an economic slowdown) rather than proactive. A federal reserve has to be proactive before the economy falls because a ¼ point means nothing and a ½ point means little because of the time lag it has to filter into economic activity.
UPST (upstart)
Upstart closed at 27.93 up 7.3% (told you it was volatile). It was a great day for the stock buy side average daily volume increased 300%. It could continue to rally into next week’s conference call. But in my opinion, their largest move will be closer to year-end if the economy doesn’t tank and the Fed gets off the sidelines