Major averages fell on higher volume. The most recent Fed meeting minutes are due out today at 2 pm ET. The main thrust of the minutes will probably be lathered by Fed Chair Janet Yellen's dovish tone, despite any dissenting views.
Will the earnings season upon us make a huge difference in terms of market direction? In the last two earnings reporting seasons, the markets displayed a bit of schizophrenic behavior, tanking in January '16, but then trending higher in October '15. It seems the larger issues at play remain the tug-o-war between easy money polices at major central banks which propel markets higher vs. the recessionary ills of the global economy which push markets lower. Indeed, these two issues were behind the major moves in October '15 and January '16.
Meanwhile, it is imperative that investors not become overly enamored with strong price action and instead seek to sell into strength. The example of Silicon Motion (SIMO), which we first put on as a pocket pivot on March 1st at 33.98, reached a peak of 39.98 last Thursday for a total gain of over 17%. Despite the strong upside move last Thursday on heavy buying volume, that turned out to be a climactic short-term peak, and the stock has since declined and given up over half of those gains. This illustrates why investors should seek to sell into 10% or greater upside moves when they have them.
Maintaining tight stops and looking to take 10-15% or better gains when they present themselves is the only way to make progress in this difficult market. We continue to advise investors to abide by this approach.