What has changed would be the question of choice? The selling came as a result of the fear/reality of the Fed hiking interest rates prior to the year end. At least that was the primary headline assigned to be the reason. Based on the FOMC minutes released today that is still the wish of the Fed… Are we back to believing the rate hike is a positive for the equity markets? The majority of the Fed board believe a rate hike is in order for the December meeting… after all the economic picture is steaming along at a two percent growth rate. This is exactly why news driven markets will make you go insane if you are not already.
Some perspective is needed relative to what we believe to be true and the day-to-day news driving direction. The push to the upside started early today as several of the Fed Presidents were talking about the merits of a rate hike before year-end. That put the FOMC minutes in perspective when they were released and offered a little jump to resistance at 2075 on the S&P 500 index. The index has regained half of the test that started on November 3rd and started the bounce on November 16th. Rationale? NO… Believable? Absolutely! The challenge will come in the process going forward as to what is deemed to be a positive for the broad markets, the economy and the global economies. Expect volatility relative to the news, but respect the trend as it continues to find a way to be positive since the bounce off the September lows.
Retail has been battered by the earnings data on top of the consumer data. The five percent decline is modest by most standards currently, but it has garnered plenty of attention looking forward. Consumer discretionary (XLY) was up 1.2% on the day and higher for the second day since a test of the near term low. Retail (XRT) was up 1.1% to echo the gains of the broader sector. A reversal and confirmation of the move technically would be a positive for the broader markets, but at some point the reality of the data will matter. Take what the sector gives, but understand the risk of the sector going forward.
Healthcare, financials and basic materials were the leaders as the money flow rises in each sector showing some belief and optimism that they will lead the next leg higher.  If interest rates do climb in response to the Fed action being proposed look for financials to climb as the banks will benefit from the hike. Healthcare needs to rise back above the $71.80 mark and then the 200 DMA. Basic materials have been fine and a move back above the $45.75 mark puts the upside back in play relative to the September low. Watching how these and other major sectors play out moving forward.
Housing (XHB) rose 1.4% despite the decline in new home construction declined 11% in October. Permits however rose for new construction. Together they show some slowing in the construction side, but the future is still optimistic. Mixed data… positive day… sector rises. $35.35 is level of support we  have been watching and it tested lower, but bounced back today. Short term downtrend is still in play and a move above the 200 DMA would be a key to owning the sector going forward. Patience as this one unfolds and the opportunity presents itself.
Per the usual course of action, my email box starts to fill up when the market strings together several positive days with questions like, is it time to buy more stocks? Why are stocks rising when the economic picture is so poor? Why aren’t earnings hurting stocks more than they are currently? Shouldn’t we short this rally? Of course my responses are direct and to the point… only if you want to. Asking these types of questions is like asking how a rainbow is made or how unicorns fly? I am always telling my daughters (yes all four of them!) ask better questions and you will get better answers. It doesn’t really matter what the markets are doing… it is a matter of what you are going to do or are currently doing. Define your strategy, act on your strategy in accordance with your risk and follow it through based on what happens… not what you think, believe or hope will happen. Nothing more, nothing less.
Investing money is a matter of habits developed through practice.

I used to say it was a matter of discipline, but discipline is actually good habits exercised every day.

Practice good habits.