traderchild
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The markets have been on an extended vacation as of late.
Equities managed to squeeze out some gains at the end of trading yesterday. The major indices even won battles with each of their respective 10-day moving averages. Despite losses early on amidst mixed earnings reports, everyone got to leave the theater grinning – high-fives all around.
I want to bask in the current tranquility of low-volatility, risk-off markets. Some of the stocks I actively follow didn’t fare so well ($CROX), but overall this surge in price-action has been a thing of beauty.
However, next week is shaping up to be HUGE. We’ve got GDP numbers, the FOMC rates decision and unemployment. There is, of course, a possibility that the numbers received could be positive and put taper speculation back in the spotlight.
That would mean a lot of the gains being realized right now could be given right back to the market…
Since 2009, the correlation between the Fed balance sheet and the S&P has fluctuated just slightly. But that interconnection…or even a co-dependence on the S&P’s part has gotten decidedly stronger in recent months.
Right now, the S&P’s advance is tied not only to that balance sheet, but to expectations that the balance sheet will grow into perpetuity. Let me tell you something: the Fed’s asset purchases will end.
I’m the furthest thing from a perma-bear. But I do like to think of myself as cautious…risk-averse even. And this prevailing up-trend simply continues to lack real momentum and volume.
The 1700 level is coming up on the major index very quickly. When that overhead resistance is it, a true test of conviction will be presented to investors. Can bids continue even without solid fundamental catalysts and in the face of a drastic deviation from the risk-reward index?
A lot of questions could be answered next week and I don’t expect that everyone will like the results.
Equities managed to squeeze out some gains at the end of trading yesterday. The major indices even won battles with each of their respective 10-day moving averages. Despite losses early on amidst mixed earnings reports, everyone got to leave the theater grinning – high-fives all around.
I want to bask in the current tranquility of low-volatility, risk-off markets. Some of the stocks I actively follow didn’t fare so well ($CROX), but overall this surge in price-action has been a thing of beauty.
However, next week is shaping up to be HUGE. We’ve got GDP numbers, the FOMC rates decision and unemployment. There is, of course, a possibility that the numbers received could be positive and put taper speculation back in the spotlight.
That would mean a lot of the gains being realized right now could be given right back to the market…
Since 2009, the correlation between the Fed balance sheet and the S&P has fluctuated just slightly. But that interconnection…or even a co-dependence on the S&P’s part has gotten decidedly stronger in recent months.
Right now, the S&P’s advance is tied not only to that balance sheet, but to expectations that the balance sheet will grow into perpetuity. Let me tell you something: the Fed’s asset purchases will end.
I’m the furthest thing from a perma-bear. But I do like to think of myself as cautious…risk-averse even. And this prevailing up-trend simply continues to lack real momentum and volume.
The 1700 level is coming up on the major index very quickly. When that overhead resistance is it, a true test of conviction will be presented to investors. Can bids continue even without solid fundamental catalysts and in the face of a drastic deviation from the risk-reward index?
A lot of questions could be answered next week and I don’t expect that everyone will like the results.
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