The reasons behind this resistance comes in multiple parts. First, the markets are overbought and have not had even a minor pull back in three months. Around Thanksgiving, the SPY sat at $117.75. That would mean an approximate 10.5% move straight up. In addition, from the 2010 lows, the SPY is up 28%. That is truly an amazing move. While the markets seem tired, the Federal Reserve is tirelessly pumping liquidity into the system. There now seems to be an epic battle between the reality of a correction needed and the Federal Reserve propping.
Some of the biggest movers today are stocks that reported earnings. Caterpillar Inc. (NYSE:CAT) reported stellar growth and earnings numbers and is trading higher at $96.03, +0.28 (+0.29%). The stock made a new 52 week high today at $97.79. However, the weakness now hitting the markets has brought it in. Amazon.com, Inc. (NASDAQ:AMZN) is also surging higher ahead of earnings today, after the market closes. They are expected to report earnings between $0.88 and $0.95 per share.
As the market drops, the driver is the Dollar as it pushes up. As the Dollar pushes up, commodities and commodity stocks are pulling back. Gold and oil are both nicely lower on the day. To get more market analysis, guidance, swing trades and education, join the Research Center. Take a free trial today!
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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