Before your next trade, look at this weekly S&P chart
It was a rough week for the major indexes, mainly due
to a surprisingly hawkish statement from the Fed and escalated
worries over Hurricane Rita. We saw fairly declines over the first 3 sessions
of the week. However, the selling pressure seemed to exhaust itself midday
Thursday, which coincided with news of Rita being downgraded to a Category 4
storm and sent crude oil sharply lower. Despite the fact that equities
stabilized late in the week, technical damage was done. Energy shares were the
strongest group, while Retail stocks took it on the nose.
The
December SP 500 futures closed the week with a loss of -21.75 points, while the
Dow futures posted a same relative loss of -221points. On a weekly basis, the
ES bounced off of its lower trend line of its rising wedge pattern, while the YM
continues to contract into a symmetrical triangle. Looking at the daily charts,
a choppy Friday session ended with both contracts posting dojis. On an intraday
basis, the 60-min charts continue to provide good MA support. For you daily
3-Line Break followers, the ES is short with a Break Price of 1248.50, while the
YM is also short with a Break Price of 10720.
                   
While the
big event coming into the week was the FOMC Meeting, Hurricane Rita acted as a
large distraction from what otherwise could have been perceived as a pretty
problematic statement by the Fed. This is because there was so much hype,
thanks to the talking heads, that the Fed, at the very least, would make
comments that indicated a pause in its tightening cycle at the November
meeting. However, this was clearly not the case, as Mr. Greenspan did his usual
and gave no indication that the rate hikes would stop anytime soon.Â
While the
market sold-off sharply on the Fed news late Tuesday and Wednesday, by Thursday
all eyes had turned to Rita. When Rita was downgraded to a Category 4 on
Thursday and then a Category 3 on Friday, the mood of market players seemed to
go from panic to complacency. Because of this complacency, there is still risk
of a sell-off this week should news indicate that the storm did inflict serious
damage. Throw into the mix a clueless FOMC that is raising rates into a slowing
economy and real estate market, and I just don’t think that the equities markets
are out of the woods yet as far as further downside risks go.Â
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Please feel free to email me with any questions
you might have, and have a great trading week!
Chris Curran
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