Market at a Glance - 9/29/2016
By: Christopher Mistal
September 29, 2016
9/28/2016: Dow 18339.24 | S&P 2171.37 | NASDAQ 5318.55 | Russell 2K 1255.67 | NYSE 10753.45 | Value Line Arith 4966.27
Psychological: Concerning. According to the most recent Investor’s Intelligence Advisor Sentiment survey bullish sentiment is still elevated. Bullish advisors stood at 45.2%, Bearish advisors were at 23.1%, while correction advisors are at 31.7%. Weekly CBOE Put/Call ratio was 0.60 last week and is in the range that has recently been associated with interim tops.
Fundamental: Mixed. Yes, Q2 GDP was revised higher, but it only went from 1.0% to 1.4%. This level of growth is nothing to get excited about unless your only expectation is to avoid a recession. Even with this anemic growth, weekly initial jobless claims have remained below 300,000 for 82 straight weeks, a streak that has not been bested in decades.  The housing market is seeing some weakness as new home sales slipped in August. Existing home sales were also weaker. 
Technical: Diverging. DJIA and S&P 500 fell below their respective 50-day moving averages in early September and the 50-day average has been resistance since. NASDAQ briefly flirted with its 50-day, but quickly rebounded and even closed at a new all-time high. NASDAQ’s direction is likely to determine where the overall market and other major indices head next. If NASDAQ can hold gains and power higher, its strength will likely aid DJIA and S&P 500, but should NASDAQ begin to breakdown then DJIA & S&P 500 could easily trade down towards their respective 200-day moving averages.
Monetary: 0.25-0.50%. The next Fed announcement is currently scheduled for November 2, just six days before the next U.S. president will be elected. It is highly unlikely the Fed would raise rates then and this is confirmed by the CME Group’s FedWatch tool which currently shows just an 8.3% probability of higher rates. As much as the Fed likely wants to raise rates, it just doesn’t appear the U.S. economy has the momentum to allow for an increase.
Seasonal: Improving. October is the last month of the “Worst Six Months” for DJIA and S&P 500 and the last month of NASDAQ’s “Worst Four Months”. In election years, October ranks dead last, but excluding October 2008, ranking improves to mid-pack. Keep an eye out for our Official MACD Seasonal Buy Signal. It can trigger anytime on or after October 3.