Monday was an interesting session for the market, despite the final numbers which showed little movement. After a volatile morning, stocks sold off in the afternoon and then experienced a sharp turnaround in the closing 45 minutes as Apple (AAPL) seemingly pulled stocks up by itself. The S&P 500 gained some 10 points in the last 45 minutes alone to take it to small gains. A report on Marketwatch that the Fed would be considering an expansion of QE3 (which literally has just began) also helped lift spirits, but frankly there was no new news in this story. One of the Fed's programs - Operation Twist - is set to expire by the end of the year, so simply to replace the amount of money being used in that program the Fed would need to "expand" QE3 after the turn of the year. But the market is trained to bark anytime a rumor of anything to do with the Fed is announced..
- At the moment, the Fed is buying $45 billion of long-term Treasurys each month under its Operation Twist program, with the purchases offset by sales of shorter-term securities. Many economists think the Fed will decide to expand QE3 by that amount, and with Treasurys instead of MBS. But the announcement is not expected to come until its December meeting.
As for the markets, we continue to see almost perfect behavior in regard to technical levels. This time the S&P 500 broke out of the ascending channel it has been traveling since June for only the second time, and through the lows of October. Then it dropped almost perfectly to the highs of April 2012 which served as a floor for the day. From that level came the bounce which took the S&P 500 back to the bottom of its channel.
The NASDAQ essentially bounced off the same level it did Friday after undercutting it a bit; this index was much stronger than the others due to a huge bounce in Apple.
Apple (AAPL) had it best day in many months, with a 4% gain, about half of it coming in the last hour. However note how much less volume there was on today's gain versus Friday's losses; bulls would want to see the opposite happen. That said, none of it will matter as the company reports later this week and that report will control the near term destiny of the stock.
One stock to note is Caterpillar (CAT) which slashed its guidance yet again - but still finished up. Perhaps the litany of bad news is finally priced into the stock.
Also noteworthy, energy drink maker Monster Energy (MNST) was crushed on news the FDA is reporting 5 deaths potentially associated with one of their drinks.
- The highly caffeinated Monster Energy Drink has been cited in five deaths and one non-fatal heart attack, according to reports that the U.S. Food and Drug Administration is investigating. The reports claim that people had adverse reactions after they consumed Monster Energy Drink, which comes in 24-ounce cans and contains 240 milligrams of caffeine, or seven times the amount of the caffeine in a 12-ounce cola. Although the FDA is investigating the allegations, which date back to 2004, the agency said the reports don't necessarily prove that the drinks caused the deaths or injuries.
Switching over to commodities, we continue to see weakness in oil which is not a good sign for "risk on"...
....but good for consumers as gasoline is selling off sharply of late. Just in time for the election - coincidence I am sure.
For the rest of the week keep an eye on the Federal Reserve meeting Tue/Wed (which should be quiet despite speculation otherwise), initial (flash) purchasing manager index reports mid week, and initial third quarter GDP Friday. Aside from that, a litany of earnings report by highly visible companies will arrive.