Were the Federal Reserve minutes really that that dovish? Was it worth a 14-point rally in the S&P 500 in the middle of the day, even if the embargo was accidentally broken?
"Conditions for a rate rise increasing"—the initial headline—was hardly a sudden rallying cry.
Little wonder we were all scratching our heads on the NYSE floor as the S&P 500 briefly turned positive.
Everyone looked for reasons to be dovish. Some pointed to "Almost all voters needed more evidence for inflation confidence." OK, a bit more dovish but again often-stated.
Others pointed to the line that there were only "some participants" who saw conditions for liftoff as "having been met or were confident that they would be met shortly." That message, some insisted, was more dovish than thought.
Really? I find that hard to believe, as well.
No, I think this is a very clear sign that the trading community is "positioned" bearish. Bearish on China. And many seemed to be positioned hawkish on the Fed.
And when that changes, you get sudden reversals on heavier volume. You could see that because we rallied on much heavier than normal volume. The biggest ETFs, including SPY and IVV (both S&P 500-indexed) and IWM all seeing heavier than normal volume.
Even the Energy ETF rallied almost into positive territory in the middle of the day, though it too fell back.
Volume in the XLE was also much heavier than normal. Indeed, this was probably another "throw in the towel" day for Energy investors.
I mean a day where the sector hits a new bottom on heavy volume. Capitulation. "Get me out, I can't take it anymore" days.
Investors have tried to pick bottoms in energy on several occasions this year, and have been burned each time. Selling climaxes occurred at the end of January, the middle of March, twice in July, then in early August, and it looks like there's another one today.
Still, despite all the drama, the market fell back to where it was before the minutes came out. Volume may have been heavier than normal, but there still wasn't enough to rally the troops significantly.