A lot of cycle points to look at today. Last week the markets survived 377 trading days from the S&P 500 May 2015 high. In the very near term, futures charts survived 161 hours up from the election low. The E-mini S&P 500 hit a new high 1,444 hours from the prior high in August and it has slightly backed off. The last one to report to you is the overall market is 720 hours from the Brexit low mid session Monday.
The election is over, aren’t you glad? Honestly, it was more stressful than I can ever remember for an Election Day. I am going to leave political views entirely on the curb. But we must talk about last Tuesday evening.
I woke up from my Sunday afternoon siesta to see that markets gapped up after learning FBI Director Comey backed off the Clinton investigation. The country is divided, Washington is a mess, day-after-day of WikiLeaks revelations, layers of scandal on top of scandal, ect.
We’ve made it to the final week of the campaign. I don’t know if we are going to get a black swan out of this but we are certainly having our October surprise. What I can tell you is what I’ve been telling you. I think everyone is having election fatigue. It shows in the charts. It really hit home on Friday when the news broke the FBI reopened the Clinton case. My 1-min YM chart sank like a rock.
So it was another week, another attempt lower for the bears. What was the justification? In the Nasdaq it was 60 weeks up off its August 2015 low. For the rest, there was a lesser pivot to end the rally early last November and a lot of these names turned in a 233-day window.
The jobs number came in light at 156,000. This benefits the incumbent party because the number wasn’t good enough to invoke interest rate hike fears. It wasn’t bad enough for the market to tank. But all the other factors are still out there, including Deutsche Bank and now the rhetoric concerning a conflict with Russia is heating up.
Financials markets may have found their black swan and it had nothing to do with Donald Trump, Hillary Clinton or any of the usual controversies we’ve speculated on over the months. No, the Germans may have their own Lehman moment coming just around the corner with Deutsche Bank. A zerohedge.com story says Merkel cannot politically afford to bail out the troubled bank.
They chickened out; I knew they would. You need to understand how predictable the Fed is because they’ve been playing this same game for months now. It’s good cop/bad cop with the various Fed chieftains making various speeches about how they need to raise rates at the next meeting. Then they never do, do they?
This is the week we’ve all been waiting for. This is where the Fed meets the seasonal change point. For those of you that don’t know or didn’t quite realize it, all financial markets tend to change direction at or very close to the change of the season. Throw in a Fed meeting and it becomes more interesting. Throw in a Fed meeting in the traditional graveyard for stocks (September) and it becomes even juicer. Add a presidential election and it could be a September to remember.