This Is A Big Week The Stock Markets
$DIA, $SPY, $QQQ, $VXX
Global stock markets are anticipating a big week, though it started cautiously with light volume.
Monday at the close in New York
The DJIA closed down 62.13 pts, or 0.38%, at 16,370.96.
The S&P 500 closed down 8.02 pts, or 0.41%, at 1,953.03.
The NAS 100 closed down 16.58 pts, or 0.34%, at 4,805.76.
The CBOE Volatility Index (VIX) (NYSEArca:VXX), the market’s fear gauge, traded at 26.05 on the day.
Breadth and Volume: 2 stocks declined for each advancer on the NYSE, the volume was light at 683-M/shrs and a composite volume of 2.9-B/shrs at the close.
The Focus
The focus is around the interest rate decision from the FOMC Thursday.
The handicapping by the fed funds futures market is now placing only a 23% probability on a rate hike at this week’s meeting. It will be a big surprise to many traders if the FOMC decided to hike the fed funds rate.
My work shows the US major market index indicators are Neutral to Very Bearish, the VIX is Bullish across the board.
| HeffX-LTN Analysis for DIA: | Overall | Short | Intermediate | Long |
| Bearish (-0.36) | Bearish (-0.43) | Neutral (-0.15) | Very Bearish (-0.50) |
| HeffX-LTN Analysis for SPY: | Overall | Short | Intermediate | Long |
| Bearish (-0.46) | Bearish (-0.34) | Very Bearish (-0.52) | Very Bearish (-0.53) |
| HeffX-LTN Analysis for QQQ: | Overall | Short | Intermediate | Long |
| Neutral (-0.13) | Neutral (0.13) | Bearish (-0.31) | Neutral (-0.20) |
| HeffX-LTN Analysis for VXX: | Overall | Short | Intermediate | Long |
| Bullish (0.33) | Bullish (0.44) | Bullish (0.27) | Bullish (0.29) |
Monday, Japan and China’s stock markets declined 1.6% and 2.7%, respectively, following some disappointing economic news. Both Japan and China reported weaker than expected industrial production data. China also revealed some weaker than expected fixed asset investment data, which helped overshadow a stronger than expected retail sales report. The report was accompanied with speculation regarding its possible implication for future policy stimulus.
These markets are being governed by the central banks, as they have been for years now with their accommodative monetary policies to be enablers for capital markets.
Be keenly aware then that if the FOMC does not do what the market expects it to do this week, the withdrawal symptoms may be painful in the extreme.
Economic Date
There was no economic data out in the US Monday, but for the rest of the week we will see a number of reports: including Retail Sales, Industrial Production, CPI, and Housing Starts.
Each of those reports will be out before the FOMC decision on Thursday, meaning the handicapping of the FOMC policy decision will run up to the last moment.
Adding to the uncertainty is Quad-Witching Day Friday, the Quarterly event when the options and futures expire.
Stay tuned…
Paul Ebeling
HeffX-LTN
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