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The Action to Watch on 5/2

Not much has changed since yesterday. The seasonal bullishness for the first trading day of May played out – though it was a less than inspired moment. The S&P 500 closed up 0.17%. The bulls still have the momentum. High-yield bonds and semiconductor stocks continue to act well – which typically leads the stock market higher. Most technical indicators are sufficiently far away from overbought territory to give the stock market plenty of room to push higher if it wants to do so.

Dear Reader,

Here’s what to look for in the action today…

General Trends

Not much has changed since yesterday. The seasonal bullishness for the first trading day of May played out – though it was a less than inspired moment. The S&P 500 closed up 0.17%.

The bulls still have the momentum. High-yield bonds and semiconductor stocks continue to act well – which typically leads the stock market higher. Most technical indicators are sufficiently far away from overbought territory to give the stock market plenty of room to push higher if it wants to do so.

And stocks tend to rally just in front of a Federal Open Market Committee (FOMC) announcement. (The FOMC meets today and tomorrow.)

So… for the most part, the bulls have the edge today.

If you’re new to the Market Minute, this is how I’m preparing to trade my own money today.

Let’s start with stocks…

Stocks

The S&P 500 has resistance at 2400. Support is at 2375-ish. 

The path of least resistance for the moment is higher. But I suspect any gains this week will be given up later in the month. I’m reluctant to suggest adding new long exposure right here. But at the same time, it’s too early to aggressively short stocks. 

Traders are probably better off waiting on the sidelines for the next day or two. Let’s get the FOMC announcement out of the way.

Gold and Gold Stocks

The gold sector could not follow through on the good gains it made on Friday. Instead, it gave back all of the gains yesterday. So the sector is stuck in a choppy range, trying to hammer out a bottom.

We’ll probably need to see some weakness in the broad stock market before we get any sustained strength in the gold sector.

A little exposure to gold is fine right now. But we ought to wait for signs that the broad stock market is ready to decline before we get aggressive with new gold trades.

I’ll update regular readers on these trends throughout the day on Jeff Clark Direct.

Best regards and good trading,

Jeff Clark

P.S.  I love to hear your feedback. Send your comments and questions to me  right here.