A “Dovish Hike”, Shorts Cover………….Surprise!

March 15 Daily Review Markets & Featuring KBW NASDAQ Fintech Index KFTX

Recipe for a rally. Mix a rate hike with a dash of “dovish talk” for future hikes, toss in some short covering in bonds (driving rates lower……yeah, confusing), add a pinch of dollar selling by the longs and turn up the heat. Bring to boil and………..presto, a nice BIG rally. The surprise was that there was no surprise by the FED but a rally ensued anyway. All the major averages jumped higher and bullish cheers sounded throughout the land. Wheeeeee!!!! Seems to be no doubt that the market rally will go on forever. (note; I love sarcasm)

This time the fintech sector did not get left out and the 50 stock KFTX fintech index jumped up 7.47 points (+0.66%) to close the day at 1145.47. So lets see which of those 50 issues had a price change of 2 points and/or 3% today.

CATM  +1.50  (46.67)  +3.32%
FDS  +2.16  (179.26)
FLT  +2.63  (161.82)
MSCI  +2.98  (99.31)  +3.09%

Pretty short list for such a big rally. Breadth had 37 issues up and 13 down today, so not bad.

Now that the FED has had its day what happens now? A bit more short covering probably (can’t believe there are still shorts out there) followed by some “wait and see” and some drifting. Could be a couple of quiet days to finish the week.

Let’s face it, more and more inbound money flows into index tracking ETF’s and putting that money to work goes into fewer and fewer ‘big name’ stocks which, in turn, drives the averages higher. That “new” money is put in for “long term” investing and until there is a reason, or significant market decline, there is a complacency to not sell (all will be perfect). HOWEVER, when (not if) a selloff ensues and those ETF’s start liquidating holdings…………..OMG, take the children and hide in the cellar. It WILL be nasty. Be cautious and have a nice night.