Morning Thoughts/Bio-Techs Under Pressure (Again)

From yesterday’ note – “Today should be another quiet day ahead of the rest of the week that is packed with data......I would look for the S&P to retest last week's highs of 2125 ish...and fail....” 

And quiet it was and fail it did……yesterday morning the mkt traded right up from the opening bell……tested the highs from last week – 2125 to be exact – and then failed…. Stocks closing lower yesterday as the focus turned to the coming macro data and FED policy decision…..  The action yesterday should not have come as a surprise….I outlined the concerns and the technical's in the developing ‘bearish triangle’ for the S&P….. as well as just some profit taking on some of the better performers. 

Healthcare and Bio-techs getting hit the hardest.....  as traders took money off the table in the Biotech space  - but this makes sense – health care has been the star performer and biotech's - (up 18% ytd) -  have made a nice rebound since the pounding they took in late March – up 9%… In addition news that Mylan Labs rejected Teva’s $40 bil bid caused a little bit of angst…...so when it's time to raise some cash because the anxiety is building – where do you go?  Certainly not the underperformers……

During the day - as you can imagine - the chatter was all about Apple…what would they do?  Would they surprise the street again?  What would they announce now?    And so the answer is – Yes they killed it again - Iphones sales up 40% - most of the growth outside the US -  in emerging mkts - China, Taiwan, Hong Kong......., Yes they surprised the street again on all fronts and they announced a return of  $200 bil to shareholders during the next 2 yrs - some in the form of an 11% increase in the dividend, the balance in an additional $50 bil worth of stock repurchases - taking that total to $140 bil.  The stronger dollar did have a bit of an impact - but Apple just raises it prices to combat the negative effects of the stronger dollar.  (The average selling price of the Iphone was $659 or $60 higher than last year). This morning the stock is trading at $135 in pre-mkt trading or up 2% from last night's close. 

Today starts the 2 day FED meeting - with any policy announcement to come tomorrow at 2 pm......now - like we have been saying - no one expects any change whatsoever in current policy - the weakness in the macro data since the January meeting has caused many analysts to reduce their 2015 predictions and with the economy struggling - Janet will not have much of a choice - but the focus will now turn to the June meeting...will they announce a rate hike then?  If so - will the mkt now take a break? 

Watch the volatility on Wednesday.....if the mkt senses that rates are going up - which means that they are withdrawing support for the equity mkt - then the computers will kick into high gear and start the selling......buyers will retreat and bid lower as they test the level of anxiety created.  A move lower would happen quickly - as liquidity would dry up on the bid side....taking the mkt down and thru its 50 dma as it tests demand closer to the 100 dam at 2070.. Even so - this is ONLY a 2.5% move off the highs - so no reason to hit the panic button.........To get any more of a move lower - she would have to say very clearly that  "rates are going up in June"....(not happening.)

Today we will get a range of Case Shiller reports - not a mkt moving event by any stretch.....The Richmond Fed Survey is expected to report -2 - but that would be up from last month's -8 read - so the spin doctors will sing the praises of a 'recovering economy'.   Gold - has been showing new strength of late as it successfully pierced the 50 dma and is now attempting to challenge the longer term 100 dma at $1211/oz.  A successful breach here will allow it to run to $1228 - a more significant resistance level. 

Oil?  Well that did back off just a bit - but considering its latest move higher - no one should be surprised.  Oil should find support at $54/barrel in the short term and remain in the $54/$60 range as we move into the summer.  The key here is watching what happens to supplies as summer heats up. 

US futures are negative right now....currently down $5 - breaking the psychologically important 2100 level......The mkt will get a slew of earnings today.....BSX, BMY, CUM,  F, PFE, UPS, AKS, VLO, JBLU and WHR  are just a few of what investors will be watching....

It feels like the broader mkt needs to take a breather - which means that it just churns - directionless really,  as it digests the most recent push higher....Volumes are expected to remain subdued until we hear from the FED tomorrow. 

In Europe - mkts there are all down over 1% - as traders ring the cash register ahead of the Fed announcement tomorrow.  In London - the gov't tell us that UK economic growth was slower than expected coming in at +0.3% - marking the weakest reading since the 4Q of 2012.  British elections are just a week away and both parties are locked in the battle.  Neither side - Conservatives or Labor showing a statistical lead....And Greece - well that is still unresolved - PM Tsipiras now saying that he will put any agreement to a popular referendum if his gov't deems the agreement unacceptable - 'Let the Greek's decide....'  FTSE -1.1%, CAC 40 - 1.68%,   DAX -1.36%,  EUROSTOXX -1.3%, SPAIN -0.50%  and ITALY +0.74%.
 

Swordfish 'Palermo Style'

Raisins, green olives, capers, pignoli nuts (pine nuts), tomatoes, garlic, onion, s&p, olive oil and the swordfish.  This dish is easy to make - it will tease your senses - and tickle your pallet - only takes about 15 or 20 min's to prepare and 20 min's to cook....enough time to set the table, pour the wine, light the candles, put on the music and dim the lights.....**Preheat oven to 400 degrees (f) and for my dear friend Stu in London that would be  200 degrees (c). 
Season the swordfish with s&p.

Next soak the raisins in warm water for about 1/2 hr... drain and set aside.

 Heat the olive oil in a sauté pan on med high heat....sauté the diced onion and crushed garlic until soft. Do Not Burn.  Maybe like 5 / 8 min's....add raisins, diced tomatoes, chopped olives (no pits!), and capers - like 1 tblspn.  (If you like capers feel free to add a bit more - but not too much as the taste will overpower the dish).  Reduce heat to simmer and cover...stirring occasionally....for about 15 min's or so...

Place the swordfish in a baking dish and cover the fish with the raisin/olive/caper/tomato mixture - bake for 15 min's or until the steaks are firm.....

Present the fish on a warmed plate with steamed green beans and a large mixed green salad with red onions, cucumbers, grape tomatoes, maybe some fresh mozzarella....dress with s&p, oregano, a splash of fresh lemon juice,  balsamic vinegar and olive oil. 

Buon Appetito.