The Yellen Stock Market Doji

By: PhilStockWorld

Courtesy of Doug Short: With no change in the congressional deadlock, the S&P 500 traded in a narrow range during the first 30 minutes and then sold off to its -0.54% intraday low in the late morning. The index then reversed gears and rose to its 0.42% intraday high, hitting it twice shortly before the 2 PM release of the September FOMC minutes, in which the word “fiscal” appears 16 times, most conspicuously in reference to the considerable risks surrounding fiscal policy. As expected, about an hour later President Obama nominated Janet Yellen to replace Bernanke. Curiously, market sold the Yellen news, and the index slid back into the red, briefly, before recovering to its 0.06% gain for the day.

Here is a 5-minute chart of the day with a bit of yesterday afternoon for context.

Today’s 2.68% closing yield on the 10-year note is up only two bps from the first day of the shutdown.

Here is a daily chart of the S&P 500. Today’s market indecision was reflected in a Doji (i.e., open and close nearly identical). Volume was the highest since the quadruple witching options expirations in September.

The S&P 500 is now up 16.14% for 2013 and 4.01% below the all-time closing high of September 18.

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

- Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

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