The market melt-up appeared to be losing steam on Thursday due to chatter the Fed may hike the discount rate again, after the bell.
What's the word on the Street?
If you believe in history repeating itself, you may want to take pause, says Guy Adami. The last time the Fed raised the discount rate was February 18th, a Thursday, after the close. And the next day was options expiration, which is what we’re looking at today. I think there’s a reasonable chance they do it. I’d get flat. Looking at the broad market, I can’t help but wonder if the market wants to reverse and go down and this becomes the catalyst.
The longer the rumor is out about a hike in the discount rate, the less traders believe it, adds Steve Grasso. But that’s not the only factor dragging down stocks right now. There are also worries about Greece. New reports suggest they may need to go the IMF. It seems investors are selling the market and sitting on their hands waiting to hear what’s fact and what’s fiction. But, as long as the S&P stays above 1150 I’m a buyer.
I’m seeing aggressive buying of at-the-money puts in April SPDRs, adds JJ Kinahan of TD Ameritrade. That says to me investors are cautious and are starting to worry about all the variables that could be unsettling for the market.
Don’t forget the market has been up for 8 days, says Jeff Tomasulo of SMB. The move lower may just be investors taking risk off the table. Personally, I’m taking profits in leaders such as Goldman, Nike, and Amazon . I’m not out of the market, but I took risk off. I’m a seller of the market short-term and I’ll be a buyer on the next pullback.