US Stock Market Volatility Hobbles Fed’s Ability To React
$DIA, $SPY, $QQQ, $VXX
Volatility in US and global financial markets is very problematical and has hobbled the leaderless US Fed’s ability to raise interest rates in September or December or…ever.
The Fed missed it opportunity to boost interest rates from Zero + for the 1st time since Y 2006.
“The window was open a few weeks ago when it looked like the US had strong domestic economy, you had pretty neutral international economy and the financial markets appeared to be in relatively good shape,” said economist Mohamed El-Erian.
The Key factors “have turned market violently against the Fed, so I do not think the Fed will take the risk of hiking in this environment, because if it makes a mistake, it will end up making a mistake that will spill back on to the US economy.” And likely lead to recession.
Futures traders are betting the Fed pushes back a rate hike; the odds of an increase in September have fallen to 24% down from 42% at the end of July, according to the data I have seen.
The Standard & Poor’s 500 Index fell 1.3% Tuesday in New York, reversing the relief rally of as much as 2.9% in the last 50 mins of trading.
DJIA -204.91 at 15666.37, NAS 100 -19.76 at 4506.49, S&P 500 -25.60 at 1867.61
Decliners outnumbered Advancers on the NYSE by 1,721 to 1,384. On the NAS 100 , 1,480 issues fell and 1,379 advanced.
The S&P 500 index showed just 1 new 52-wk high and 47 new lows, while the NAS 100 recorded 7 new highs and 125 new lows.
Volume was heavy, with about 10.4-B/shares traded on US exchanges, far above the 7.5-B/share average this month, according to BATS Global Markets
- NAS 100 -4.9% YTD
- Russell 2000 -8.4% YTD
- S&P 500 -9.3% YTD
- DJIA -12.1% YTD
To have that deep a dive at the end of a market session is worrisome about the participants’ market sentiment.
| HeffX-LTN Analysis for DIA: | Overall | Short | Intermediate | Long |
| Bearish (-0.47) | Very Bearish (-0.62) | Bearish (-0.49) | Bearish (-0.29) |
| HeffX-LTN Analysis for SPY: | Overall | Short | Intermediate | Long |
| Bearish (-0.40) | Very Bearish (-0.62) | Bearish (-0.48) | Neutral (-0.09) |
| HeffX-LTN Analysis for QQQ: | Overall | Short | Intermediate | Long |
| Neutral (-0.23) | Neutral (-0.18) | Bearish (-0.44) | Neutral (-0.08) |
| HeffX-LTN Analysis for VXX: | Overall | Short | Intermediate | Long |
| Bullish (0.25) | Bullish (0.42) | Bullish (0.25) | Neutral (0.10) |
Stay tuned…
HeffX-LTN
Paul Ebeling
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