Yesterday had two good reasons to sell a bit. First, there was the overbought conditions on the NASDAQ, and then we had some caution ahead of the Fed Yellen, who will be talking to the big boys and girls of our Government for a couple of days. That was enough to keep the buyers away for a day, but we shall see what occurs today. We also know there are other reasons to sell, but it's not worth spending our time on that subject any more, until we get the technical move that says we should. The market made the usual attempts to blast up, but those were met with some selling back down, although, when all was said and done, the bears accomplished nothing today.
The NASDAQ 100 actually finished green a bit. The market just doesn't want to sell in front of Ms Yellen, who they know will keep protecting it, even if she says there will be a rate hike soon when she speaks today. The market knows all too well based on her past behavior that there is nothing she won't do to protect Wall Street in order to keep Main Street rocking. So we looked at yesterday's market behavior and came up with the same old story. The bears are spectators to the dominance of the bulls and it's showing no signs whatsoever of letting up any time soon, although you know me, never think it can't turn in an instant when froth is this bad. That said, there are no signs of anything bad at this moment in time.
One hour after the market closed for trading on Friday, State Street Corporation (NYSE:STT) decided it was time to lower their earnings projections by 10% due to their needing to raise an additional 65 million dollars for legal expenses due to illegal allegations over trading behaviors. It seems the financial stocks are somehow always involved in those types of allegations. I thought the stock would get annihilated yesterday, but thankfully, it never occurred, and when the day was over it actually printed a decent inside candle on declining volume. If you're a bull you can't complain about that.
Of course, that stock, and all financial stocks, will be affected by whatever the Fed says regarding rates today, but as for yesterday, you can say we dodged a massive bullet. It could have been very ugly, but these bank stocks are so used to getting graced due to illegal allegations, and, thus, legal costs, I guess it shouldn't come as a major surprise. That’s a sad reality for the environment in which we trade. I'll keep a keen eye on the behavior of this, and all bank stocks today, but thankfully we're fine. We can only hope there are no other surprises there, but I'd like to think that the worst of things is now out there. We got very lucky yesterday.
Since the market acted decently last week I can only imagine that the bull-bear spread has actually worsened. When we get the numbers this Wednesday, my guess is we're actually above last week’s 42.4% reading, which is just insane. There has to be a number that snaps the market lower and allows for a real correction, but I have no idea what that number is since we're already well above what that number would normally be. All I can keep suggesting to all of you is to respect these levels for what their potential is with regards to market behavior. Don't let your guard down. Keep those stops in place. When it hits to the down side, it will be sharp and swift. Stick with the best earners. Stick with leaders.
The market only needs one excuse to sell hard when there are numbers such as we're dealing with now. The trend is bullish, no doubt. I would not be shorting, but I would continue to respect what's possible if something goes wrong. We're staying with the trend until it flashes a true sell signal technically. A day at a time, but today should have some real wild swings based on the Feds. Pull up a chair and enjoy the show.