Monday’s Bounce Must Hold for US Market to Continue North

Monday’s Bounce Must Hold for US Market to Continue North

Monday’s Bounce Must Hold for US Market to Continue North


Last week ended on a low note as the major US stock market indexes all declined more than 2.0% and 3.1% in the case of the Russell 2000 in a selloff.

The CBOE Volatility (VIX) Index, meanwhile, spiked 40% in a rush for some protection.

Monday’s expected bounce is not upbeat yet.

Foreign equity markets have lost ground Monday Friday’s US session, and press reports are discussing increased political uncertainty following the revelation that presidential candidate Hillary Clinton has been diagnosed with pneumonia.

The VIX is up 7.8% to 18.87, and hit a high of 20.51.

Much of the rebound effort happened in the last hour or so without any news catalyst to account for the turnaround.  The hold of 2100 overnight by the S&P futures may have been treated as a technical buying catalyst.

Atlanta Fed President Lockhart (non-FOMC voter) delivered a speech at 8:00a EDT.  He tried to steer clear of contributing to the market volatility, saying he was not planning to offer an opinion on what will likely be done at the September, November, or December meetings.  Then he said that he thinks that circumstances call for a “lively discussion” at next week’s meeting.

The market fixated on what Fed Governor Lael Brainard (FOMC voter) said today in her speech to the Chicago Council on Global Affairs at 1:15p EDT.

Ms. Brainard is a known Dove.

Reports suggested her speech that focused on the economic outlook and monetary policy implications, will be interpreted by the market as a piece of telling insight into what the Fed is likely to decide at its September meeting.

So, if Ms. Brainard’s speech is seen a more Hawkish see more selling interest, whereas a more Dovish-sounding perspective could lead to a buy-the-dip rally.

Fed Governor Brainard: Recommends “prudence in the removal of policy accommodation,” …”this approach has served us well” recently; cautious approach taken by the Committee and a corresponding easing in financial conditions” have supported recovery.

Sounds Dovish to me, but we have to wait and see, but with the clear sensitivity to rate-hike pressures seen Friday, there is market angst in the market.

There was no economic data of note out of the US today

Again, Wall Street’s attention to interest rate moves is at the forefront in here.

Monday, the major US stock market indexes finished at: DJIA +239.62 at 18325.07, NAS Comp +85.98 at 5211.89, S&P 500+31.23 at 2159.04

Volume: Trade was heavy with about 982-M/shares exchanged on the NYSE.

  • Russell 2000: +8.6% YTD
  • S&P 500: +5.6% YTD
  • DJIA: +5.2% YTD
  • NAS Comp: +4.1 % YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Neutral (0.09) Neutral (-0.19) Neutral (0.05) Bullish (0.42)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.09) Neutral (-0.08) Neutral (0.06) Bullish (0.29)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.30) Neutral (0.04) Bullish (0.36) Very Bullish (0.50)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.41) Neutral (0.02) Bearish (-0.49) Very Bearish (-0.75)

Stay tuned…


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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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