Yesterday’s swoon on the release of FOMC Policy Statement has spilled over into today, as markets are once again sharply lower. The pain is not confined to equities alone, as stocks, bonds, and commodites are all being hit very hard today amid fresh two-year highs in bond yields. The S&P 500 tested the key 1600 once already today, and is currently trading near that important level. Currently, the Russell 2000 is today’s relative laggard, lower by 2.1% for the day. The S&P 500, Dow, and Nasdaq are all about 1.5% lower, while bonds are getting bludgeoned, off by about 2.2%. Gold broke the round-number 1300 level today, and is off nearly 5% from yesterday’s closing price. Today’s intermarket action clearly shows that the “risk on” environment of the past few months is definitely a thought of the past, as the U.S. Dollar Index is up by 0.6%, and trading at fresh two-month highs today.
CHART OF THE DAY
Live Nation Entertainment (LYV) – The live entertainment concern has had quite the year, up about since January. The shares recently made new three-year highs around 16 and have since consolidated nicely back near the 15 level, offering a nice entry from the long side. Despite its strength, sentiment toward LYV remains skeptical. Currently, 10% of LYV’s float is sold short. This creates the potential for short-covering rallies going forward. Additionally, there are over 21 puts for every call currently open in the front three months’ options series. This creates the potential for a bearish unwind going forward.
I like a long entry here with a stop on a close below 14. I would initially target a move to 17.50, with 20 as a stretch target.
WHAT I’M EXPECTING
Given how we’ve tested the 1600 level for the second time and markets aren’t showing signs of a strong bounce, I’m looking for a push down to the 1575-1580 area on the S&P 500. It seems that everyone is watching 1600 like a hawk, and a technical breach of this area could spark some reactionary selling. Should the level hold, however, a move back above 1610 would likely lead to continuation back near 1630.