S&P 500 Continues Fight at the 50-DMA

The S&P closed at 2747.33 – So today’s circuit breakers are:
 
Level 1.  192.31 pts (7%) or 2555.02
Level 2.  357.15 pts (13% total) or 2390.02
Level 3.  549.46 pts (20% total) or 2197.87
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Stocks ended the day mixed on Thursday - the Dow added 115 pts while the S&P lost 2 pts and the Nasdaq gave back 15 pts..... Remember what I said yesterday about the S&P -  
 
"Key level to watch today is 2748…….  if we fail to take it back then that sets us up for another conversation about testing lower.  I think it will fight hard to hold onto the levels right here but in the end – I believe that the path of least resistance is lower….so look for 2680/2750 to now be the new range…. "
 
And while the mkt did fight to hold onto its 50 dma yesterday....in the end it did FAIL closing the day lower....and while it was not substantially lower - the fact is that this is proving to be a sticking point.... what is next?  Which way will the mkts turn? 
 
Yes, but you say - the Dow had a good day - well if you really think about it, the Dow got slammed on Wednesday - it lost over 200 pts so there was a bit of bargain hunting going on in some of the Dow 300 'industrial' names that had gotten kicked in the gut....BA, MCD, CAT, UNH, GS, MMM, XOM clear winners in terms of point values added to the Dow….  A rally of 115 pts is only a take back of 50% of what it lost the day before.... Capisce?
 
 
Eco data proved a bit better, - Empire State Manf reporting much stronger results than anticipated  but not so much as to ignite the world on fire.....investors/traders continue to be unsettled by the lack of clarity over tariffs and a possible trade war as retaliatory arguments are being made by both our allies and our 'not so allies'......as well as the building budget deficit that is sure to become the an issue as we move into summer - this issue has been put on the back burner, but the heat is about to be turned up so expect that this goes from simmer to b boil in the months ahead - and as you know the mkt is a discounting mechanism that usually trades 4 - 6 months out - so it is not surprising to see the mkt come under stress as this issue gets more attention.
 
Materials, energy, chemicals, technology, financials were all weaker - casting a heavy tone over the mkts as trade issues that disrupt the global recovery continue to be the talk of the day. 
 
Pipeline companies took it on the chin in the afternoon after the Federal Energy Regulatory Commission eliminated some key Master Limited Partnerships income tax allowance for this sector. - Williams and EQT along with Cabot, Gulfport Energy, REX Energy, Range Resources all got slammed.  The Alerian MLP Index fund (AMZ) falling over 4% after the news. 
 
And while some think that the latest Mueller news about subpoenaing the Trump Organization was the cause for the mkts to throw a tantrum -  Don’t' be fooled...investors/traders couldn't care LESS about this headline in terms of stock prices.  No one is buying or selling IBM, GE, KO, JNJ, BAC, JPM, GS, MSFT, AMZN, FB, GOOG etc on this headline at all.... Don’t be ridiculous...not happening.  What will they say today - that Donny Jr's. official divorce announcement drove stocks lower?  Really?  It is NOISE - and that is all.... those headlines do nothing to price stocks and if you are buying or selling stocks based on those headlines - then maybe you should reconsider your investment thesis....
 
Today is the end of the quarter for options in what is known as the quadruple witching - the simultaneous expiration of 4 classes of options. - market index futures, market index options, stock futures and stock options - it is marked with unusually high volumes on both the opening and the close and can result in increased volatility at those times.  Now the technology has gotten so much better so the pre-opening looks that show either massive amounts of stock for sale or to buy - end up pairing off in the seconds before the bell rings....so the initial sense of significant moves ends up being essentially a non-event in the end. 
 
Eco data today includes Housing starts exp of -2.7% and Building Permits are looking down by 4.7%, Ind Prod of +0.4%, Capacity Util of 77.7% (still not enough to cause any pressure – but as we approach 80% the story will begin to change – just sayin’)
 
European mkts are up small…. Core EU HICP (which is their CPI reading) met expectations at 1%.   FTSE +0.13%, CAC 40 + 0.12%, DAX +0.56%, EUROSTOXX +0.16%, SPAIN +0.31% and ITALY + 0.96%.
 
US Futures are up 2 pts in early trading. Key level to watch today is still 2748……. Until it makes a definitive decision – we can see more churn right here around the 50 dma.   
 
The VIX (fear index) is down 0.23 cts at 16.86 –   
 
Oil – is UP 0.15 cts at $61.35… Resistance is still at $62.52.
 
 
The dollar index – DXY – is down 0.17cts at 89.86 – It did challenge resistance again and it failed to push thru again…So 90.05 is proving to be a bit of an issue…. but it does feel like the next time it tries – it will succeed…. - if it pierces it – look for it to move up to 91.80 – but another failure here could see the index fall back to March lows of 89.43.

Take Good Care

KP

Farfalle w/Roasted Eggplant, Sundried Tomato Pesto and Goat Cheese 

(Farfalle con Melanzane Arrostite, Pesto di Pomodori Secchi e Formaggio di Capra)
 
How beautiful does that sound?
 
So, this is simple to make and presents beautifully on the table.  For this you need:
 
1 eggplant cubed, olive oil, 1 cup of oil packed sundried tomatoes, garlic, parsley, s&p, 1 lbs of Farfalle (bow ties) pasta, goat cheese. 
 
Preheat your oven to 400 degrees
 
Bring a large pot of salted water to a rolling boil.
 
Put the cubed eggplant in a strainer and lightly salt – let sit for 40 mins (get the water out).
Put some olive oil in a roasting pan and then toss the eggplant to mildly coat it.  Season with s&p.  Place in the oven and roast for 25 mins or so.  Be sure to turn the cubes once or twice.
 
While this is happening – break out the food processor and combine the sundried tomatoes, some parsley, 2 cloves of peeled garlic and a bit of olive oil and pulse to blend.  Do NOT PURIFY…. just pulse it – capisce?
 
Now cook the Farfalle until Al-dente…about 8 mins.   Strain – always reserving a mugful of the pasta water.   –
 
Return the pasta to the pot – add in the roasted eggplant and the tomato pesto mixture.  Toss well to coat.  Add maybe ¼ cup of the pasta water and turn up the heat on the stove to mix and coat well.  Serve in warmed bowls with goat cheese on top.    Enjoy with a nice class of pinot noir – perfect – not heavy – just right.



Buon Appetito.