This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Janet Yellen Is Confusing All of Us: Market Recap

Stocks in this article: SPX DJI FDX

NEW YORK (TheStreet) -- The markets opened to the downside on Wednesday. However, in what seems like common behavior for the indexes these days, the Dow Jones Industrial Average and S&P 500  quickly were bought by the dip buyers.

For the rest of the morning and early afternoon, the indexes traded in a narrow range awaiting the Federal Reserve's policy making committee.

After the Fed's announcement, the indexes sold off initially. They tried to regain their footing but continued lower. With the announcement of increased tapering from the Federal Reserve, which means they will continue to reduce their bond buying stimulus program, the markets were not able to recapture the upside.

By 3pm New York time Wednesday, the markets completely fell apart, falling nearly 200 DJIA points. This stock market has been relying on the Fed for all of its liquidity. It may very well be time for the markets to face reality.

The last hour of trading saw whip saw action. The DJIA cut its nearly 200 point loss to under 100 points, before closing down 113 points at 16223.46. The S&P closed down 11.41 points at 1860.84. So, where do the markets go from here?

Patience and opportunistic trading is required in this type of market. Chasing can only be a recipe for disaster. 2013 is over. 2014 is a new ballgame.

The markets are confused right now as to which direction they should proceed. They are getting mixed signals. With the economy showing signs of slowly and a weak dollar, increasing the taper seems to be the absolute wrong course of action for the Federal Reserve to take at this time. The tapering should have taken place last year when the dollar and interest rates were rising, not falling, and the economy was on a much stronger course.

Once again, the overall volume continues to shock to the downside as the markets signal another v-bottom bounce.

Monday had the 2nd lowest NYSE volume of the year and Tuesday was the 3rd lowest volume day of 2014.

Wednesday, however, showed a return of above average volume on a down day. This has been the pattern in 2014. The up days have shown much lower volume than the down days. That is something that needs to be watched carefully.

Turning our attention to some economic numbers that came out. This weeks total MBA Mortgage Index was down -1.2% vs -2.1% last week as demand continues to fall as interest rates fall.

It also appears that the corporate profit cycle is slowing as FedEx Corp (FDX) projects fiscal year 2014 earnings per share estimates of $6.55-$6.80 vs the street estimates of $6.73-$7.10.

There are many crosscurrents that are taking place in this stock market in 2014. Unlike 2013, where a buy and hold strategy was the norm, 2014 is shaping up to be a buy the dip, sell the rip trading platform. Volatility is the norm so we must accept that fact and act accordingly. Risk management is paramount.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs