Despite it being a QT day of significance and without the benefits of U.S. Treasury issuance offsets, the major averages still rallied and after the FOMC minutes were released. The minutes proved innocuous by and large, inline with what most economists, strategists and analysts had previously assumed. The assumption was that there would be some debate and or dialogue amongst the committee members on how to approach ending the balance sheet reduction program.

"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year. Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet," the document said."

On the rate hike front, patient was the peppered verbiage within the minutes The Fed judged that a "patient" approach to interest rate hikes would be prudent as it continued to weigh various headwinds to economic growth, those headwinds at home and abroad.

"Participants pointed to a variety of considerations that supported a patient approach to monetary policy at this juncture as an appropriate step in managing various risks and uncertainties in the outlook," the minutes said."

If there was anything that market participants could view as anti-market or hawkish it would have been the insinuation within the Fed minutes that noted if the potential headwinds eased, a re-evaluation of the "patient" approach would be warranted.

As noted earlier, the market seemed to accept the FOMC minutes in stride, finding little new nuggets of information of very much concern at the moment. Another significant announcement came in the afternoon from Samsung. The Korean manufacturer announced the first consumer-ready foldable smartphone Wednesday at a launch event in San Francisco. The new phone, called the Galaxy Fold, has a special display that can fold open, from the middle, if you want to use it like a tablet.  I have been on top of this technology since 2016 when I authored a piece on the smartphone industry's usage of curved glass. In the article titled A Deep Dive Into iPhone 8 and Curved Glass, I dive deep into the production issues related to the usage of curved glass and the innovations that Samsung was working toward at that time.

"The latest rendering comes from Samsung, offering a 3-in-1 smart device platform of their own with flexible OLED technologies. The following renderings come from galaxyclub.nl.

"Meanwhile, Samsung's rumored foldable display phone is slated to make a debut in 2017. The device has been reported by some tipsters to be named Galaxy X and may be launched sometime in the first half of 2017. While the WOW factor looms, again, investors would be sensible to consider the cost of such a technology."

So it took Samsung a bit longer than the electronics maker forecasted, nonetheless, it's coming very soon.  But the problems that were presented within the usage of curved glass have not been improved upon since 2016. It's a highly expensive and time-consuming process and as such, it demands of it a high price point for finished goods. Hence the $1,980 price point for the announced foldable smartphone.

Some are espousing that the foldable smartphone/tablet will be a "game changer". It won't be and Samsung simply isn't aiming for it to be. They are simply aiming to capture more market share any which way they can.  With the consumer more price conscious than ever and found not upgrading smartphone packages as frequently as they had been in past years, we expect the Galaxy Fold to fall behind the Galaxy Note in unit sales. It's a nice innovation, but the cost of innovation simply outstrips its serviceable market and still with no massive utility gains. Good job Samsung, but not good enough to be a "game changer".

With the S&P 500 edging closer and closer to 2,800, both breadth and oversold conditions continue to weigh on the minds of bulls and bears alike. The NYSE Advance/Decline (AD) line made another new all-time high yesterday. This is a good thing, as market breadth tends to lead stock prices. Also, breadth breaks down ahead of major market peaks. 

Seeing as the A/D line continues to make new highs and hasn't broken down as of yet, we expect the S&P to plod higher unless there is a resulting shock to the market. Another way we can review overbought conditions is via the NYSE McClellan Oscillator.

The NYSE McClellan Oscillator is above zero for 34 consecutive days. This is an extremely long streak of strong breadth for the Oscillator and we wouldn't be of the opinion it can sustain these levels for much longer.

Does that mean a severe crash is in store for the market, no! But some type of market cooling is likely in store. Are we suggesting to bail out of the market, certainly not! But if you have some losers, this might be the time to start thinning out the portfolio and culling those losers. Additionally, it might be time to start protecting some of those gains year-to-date.  

The VIX has continued to baffle those who assumed that volatility was here to stay. Today, the VIX achieved a level it hadn't achieved since October 3rd of last year. The VIX closed near the low of the day at 14.02 and briefly broke below 14 to achieve 13.99 intraday. This has also manifested itself in the VIX of VIX or (VVIX) which finished at 75.59 on the day.  And this has manifested itself into the highest contango in the VIX Futures market since last October as well.

While the screenshot represents after hours Futures trading, February 20 VIX futures contango settled at 4.17%, now presenting a stronger headwind to VIX-ETP price appreciation (UVXY, VXXB, TVIX). As contango has been extremely light and even absent for several months now, I have simply been scalping TVIX and UVXY on a daily basis and issuing alerts to finomgroup.com subscribers (for whom I am employed), as shown in the table below of our YTD trade alerts. I've forgone building a greater core short holding until contango grows above 5% and found with a favorable macro-economic backdrop.  I encourage readers and visitors to trade with us with our premium subscription service. (YTD results below)

With two more trading days in the week, strong S&P 500 resistance ahead and relatively cheap hedges forming day-to-day, I expect an eventful end of the trading week. And for a technical review of market activity and outlook going forward, check out Wayne Nelson's daily market recap by clicking this link.