Editor's Note: Combining his passions for the markets, humor and food, "What's cookin' with Kenny Polcari" is a blog published twice weekly on CNBC.com. With more than 30 years of experience on Wall Street, Polcari provides insight and analysis on the markets as well as a recipe du jour. Buon Appetito!
The focus on Wall Street has shifted from the threat of a possible U.S. strike on Syria to a glut of positive macroeconomic news from the United States, sending stocks higher on Wednesday, but can the rally continue?
Traders reacted positively to auto sales and the Federal Reserve's Beige Book report, choosing to get long ahead of Thursday's ADP employment report and Friday's nonfarm payrolls data, as they are convinced both these reports will be positive. That's a recipe for more gains, which by the way, I have a great recipe for balsamic roasted chicken to share with you, but more on that later.
(Read more: Why Friday's jobs number is make or break)
The positive data sent the stock market higher on Wednesday, after testing support at the 1,625/1,630 range on Tuesday when the Fed just happened to be adding some $5 billion worth of stimulus. On Wednesday, it pumped another $1.5 billion into the system, surely to help calm the markets over the growing crisis in the Middle East, which only brings up the whole tapering conversation—will the Fed dial back its bond-buying program, causing potential market instability while the country is debating whether to send cruise missiles into Syria? I'm just sayin'.
For markets, the law of unintended consequences should never be lost from the analysis—remember what your ninth-grade science teacher taught you—"You can never just do one thing. One action can cause multiple reactions."
And this is what investors need to keep in mind while strategizing about Fed tapering and the effects of military action in the Middle East as one strike may force a reaction by some of the other "bullies" in the region. This is another reason why I think that the Fed will continue to use its QE cruise missiles to keep the markets supported until this immediate threat goes away.
With less than two weeks until the famed Federal Open Market Committee meeting, the Fed continues to analyze the data and that data were solid. This is consistent with much of the recent commentary and of brighter days ahead, but does not discount the near-term volatility and potential downside pressure during September and October.
(Read more: Taper? This Fed official wants to step on the gas)
The Beige Book report, a summary of commentary on current economic conditions from each of the 12 Federal Reserve Banks, showed that the economy continues to grow at a "modest to moderate rate" in some districts. Consumer spending is supposedly improving and cars are selling at a "robust" rate. Hmmmm. (The report gathers "anecdotal" information from their districts by conducting interviews with businesses, economists and other "market experts" to assess the state of affairs across the country. This report is published eight times a year right ahead of the FOMC meetings with the next meeting scheduled for Sept. 17-18.)
Next up, new car sales plus-17 percent (low interest rates) with customers scrambling for certain models, all considered compacts, including the Nissan Sentra, Ford Fusion and the Subaru Forester to name just a few. The turnaround in U.S. auto sales is being described as "phenomenal" by some. Doug Waikem, a car dealer in Massilon, Ohio, said, "It hasn't been like this since the '80's."
Wednesday's report has auto sales running at 16 million annualized units. At this rate, car companies can actually turn a profit after some real cost cutting and overhead reductions. They have closed dozens of plants across the nation and Canada, cut union wages, cut health-care benefits and they have buried some iconic brands like Pontiac and Mercury. They have eliminated dealerships across the nation and have smartened up and stopped "stuffing" dealers with inventory that would not sell.
All of this is good for the industry and with artificially low interest rates consumers are responding.
Wednesday's stock market strength, although positive, was still not convincing. The market rallied (the S&P closed at 1,653), but failed to really test resistance at 1,662, leaving us in that 1,625/1,662 range.
Although the bounce may pick up some steam before reversing, investors should realize that overall volumes will contract as many celebrate the Jewish holidays potentially exacerbating the volatility. I would expect the market to churn here before moving a bit lower ahead of the FOMC meeting.
Kenny Polcari's recipe du jour:
Balsamic Roasted Chicken
This recipe is a family favorite. It is a great dish and you can make it for a big party or get together. It's simple to do and presents beautifully on the platter.
For this you need:
- Chicken parts on the bone: thighs and breasts with skin on
- Olive oil
- Fresh rosemary
- Fresh sage
- Fresh thyme
- Bay leaves
- Olives (green and/or black)
- Kosher salt
- Fresh ground pepper
- Balsamic vinegar
First, soak and clean the chicken. Then, pat dry on paper towels and arrange in a roasting pan. Drizzle with olive oil, rub it on to each piece. Season with salt and freshly ground pepper.
Peel garlic and arrange around and under the chicken parts. Add rosemary, thyme, sage and bay leaves. Put the herbs around and under the larger pieces of chicken. Add two cut-up large onions and spread it around the chicken. Use Vidalia onions if you have them, but any onion will work.
Roast the chicken in the middle of a 400-degree oven for about 45 minutes. Check the pan every 15 minutes or so and remove any excess liquid with a turkey baster. The object is for the chicken to roast, not braise. Save the juice on the side in case someone wants some with their meal.
After 45 minutes, drizzle the chicken with a good-quality balsamic vinegar, add the olives, turn the heat up to 450 degrees and roast for 15 minutes more.
You can serve this with a nice green vegetable of your choice, roasted potatoes or rice. Always include a tossed green salad.
—By Kenny Polcari, director of NYSE floor operations, O'Neil Securities and CNBC contributor, often appearing on "Power Lunch." The author is not compensated by CNBC for this or any other written materials found on CNBC.com.
About Kenny: Kenny has more than 30 years of experience on Wall Street. Currently director of NYSE floor operations on behalf of O'Neil Securities, he has also worked for Icap Corps and Salomon Brothers. You can follow Kenny on Twitter
@kennypolcari and visit him at kennypolcari.com.
Disclosure: The market commentary is the opinion of the author and is based on decades of industry and market experience; however no guarantee is made or implied with respect to these opinions. This commentary is not nor is it intended to be relied upon as authoritative or taken in substitution for the exercise of judgment. The comments noted herein should not be construed as an offer to sell or the solicitation of an offer to buy or sell any financial product, or an official statement or endorsement of O'Neil Securities or its affiliates.