April 10th, 2017 08:04
We had a great time at the Stocktwits conference known as Stocktoberfest.
Normally this event takes place in San Diego in October but this year the good folks at Stocktwits took the party on the road to New York City to offer a second venue. The venue, Guastavinos, was stunning and the food was magnificent.
The glorious day was hosted by Stocktwits founder, Howard Lindzon. The finale included a fun interlude with Howard and Downtown Josh Brown who is one of my favorite market writers. It was great to finally meet them both in person.
The day was filled with meaningful insights for the future of finance. We are an evolving world and trading, investing and fintech is evolving along with it. Panels throughout the day were exciting and saw participants from Bloomberg and other well established financial journals debating with up and coming fintech CEO’s.
Alpaca had a great location to exhibit our new mobile stock stories app from AlpacaScan. We were energized by the positive reactions to our automated notifications and we look forward to sharing that with the public in the coming months when we launch our public beta app.
Markets have been slowing down their ascent lately and March is the first time SPY closed lower than month over month. Bulls are hanging on tight though, and we’re not seeing heavy distribution just yet. There have been a couple of strong sell-offs as volatility tries to lift its head back up.
Wednesday of last week marked a pretty strong reversal in indices that were ready to close higher on the day. Although the daily loss was relatively small at only 0.18% in SPY, the turnaround was enough to spook some players.
The cause of the reversal? Taper tantrum…yep, we are still having taper tantrums.
Fed minutes not only revealed that interest rates will rise at a possibly more aggressive pace but that members feel it’s time to unwind its balance sheet. This means it will start to sell back the government bonds it was buying as part of its effort to boost the economy. And they made it very clear that they welcome a downdraft in equities because they feel markets have become too expensive.
As interest rates rise and the Fed unloads those bonds, we can be pretty sure the market will feel the pressure to dip lower.
Between the Fed minutes and the controversy continuing in the Washington, including the inability for the Administration to pass a health care bill, some type of correction seems likely.
The question always becomes, how deep of a correction do we have in store?
Markets correct in one of two ways, they either drop in price or they go sideways. As strong as markets have been, it is reasonable to think that a correction will be more of a sector rotation with indices in that flatline for a period until overbought conditions are less overbought.
Only time will tells us what the indices will do but bears have definitely struggled to push prices significantly lower.
The current daily and weekly charts of the SPY look anything but bearish.
The weekly chart looks to be setting up a J-hook and the daily has a bullish pennant. Both time frames have closed below their respective 8 ema’s (exponential moving average), however, and if SPY cannot recover those levels, we might see some stronger distribution in the near future. If you follow my blogs regularly, you will know that the 8 ema is my trigger line. Stocks tend to go up when above and down when below this significant level.
The daily chart closed with a doji on Friday, which marks indecision from investors.
Monday’s action will let us know whether market makers are still bullish or if they’re starting to doubt the current pricing in indices.
Here is the daily followed by the weekly chart:
I have been writing about our mobile stories for a few weeks now so hopefully you know where to find them, but just in case you don’t and if you’d like to be one of our beta testers with early access, simply click this link AlpacaScan Mobile Stories | Alpaca.
We spent Saturday at the National Academy of Sciences in San Francisco. This is a great museum with a huge aquarium. I highly recommend a visit to all of our local friends if you have never been there. Today we will get ready to host friends the coming week who are visiting us from New York for Spring break. I just came back from New York so it’s a little bit ironic, but we’re really looking forward to it! I hope everyone is having a relaxing weekend. See you all tomorrow in the trade-o-sphere.
The author, Danielle Spandau is a seasoned trader/investor and educator also known as The Trading Wife.
All information and/or opinions contained herein are impersonal, for informational purposes only, and do not constitute a solicitation or offer to sell securities or investment advisory services. The views and opinions expressed in this article are those only of the author(s) and do not necessarily reflect the opinions of Alpaca. If you are considering making an investment, you should consult with an investment professional.