Commentary: Paul Ebeling on Wall Street
$DIA, $SPY, $QQQ, $VXX
The Big Q: Where does the Fed stand in this volatile stock market?
The Big A: For the past 9 years the Fed has stood behind this rallying US stock market. Every serious dip was met with the Fed waffling on is plans to remove or add stimulus.
That may have changed.
Last week when Janet Yellen walked out of the Fed’s cafeteria, she said, Yes, equities and real estate values were ‘high.’
Early last week a Fed spokesman said that 3 rate hikes were the base case and likely more could come if
economics were strong, he said it again last Thursday.
Also Thursday, NY Fed President Dudley referred to the stock market selloff as ‘small potatoes’ and opined the economy would continue to grow above pace. So, does Mr. Dudley really believe the Fed “is going to have to continue to remove monetary policy accommodation?”
Thus, it appears the Fed will continue hiking interest rates, and if the economic data is right, it should do.
The markets is worried that the ‘always behind the curve Fed’ could panic, overreact, and again
affects a market breakdown the presages an economic fall from expansion and prosperity to more stagnation.
Shayne and I do not see that happening with the New Trump Chairman at the head of the FOMC table.
So, for now the Fed is on the path for 3 or more rate hikes in Y 2018.
Given that, the market fell as Schoolmarm Yellen walked out and as Chairman Powell walked in, this is
perfect for Chairman Powell.
If the market continues to corrrect he can cite changed circumstances, and if the market finds the bottom as it should and will, everyone will conclude that he is wise and restrained.
Trust and Confidence follows, and then good things, all’s good ahead.
With that the market sets the real price Vs Fed’s Bernanke induced ‘put’ pricing, meaning there is no guarantee of a Fed stepping in and ‘buying the dip.” And typical, tradition market moves are back in play for this correction.
Pay attention, always take what the market gives, and it is your money, so your responsibility.
Caution, do not trade arcane leveraged instruments if you do not understand the risk.
The Bulls Vs The Bears
VIX: 33.46; +5.73, is up but not soaring, it did not take out the prior high from last Tuesday, not even close, fact is it is lower than last Monday.
VXN: 33.89; +9.16
VXO: 32.36; +11.36
Put/Call Ratio (PCR) CBOE: 1.14; +0.23, this was the 1st spike over 1.0 in many moons.
The Bulls Vs The Bears
The Bulls fell over 10 points and Bears rose 3 points, these are major moves.
The Bulls are at 54.4 Vs 66.00 last.
The Bears are at 15.5 Vs 12.6 last
Support and Resistance
DJIA close: 24,190.90
24,835 from Dec 2017
The 50-Day EMA: 25,003
26,000 from Jan 2018
26,439 from Jan 2018
26, 617 the Jan 2018 all time high
23,602 a Nov 2017 high
23,608 the Nov high
The 200-Day SMA: 22,794
22,420 the Sept 2017 high
S&P 500 close: 2619.55
2694 a Dec 2017 high
The 50-Day EMA: 2713
2751 from Jan 2018
2808 from Jan 2018
2850 from Jan 2018
2873 the Jan 2018 all-time high
2597 the Nov 2017 high
2569 the upper channel line from the 9 March 2009 uptrend channel
The 200-Day SMA: 2539
2491 the Aug 2017 high
NAS Comp close: 6874.49
6914 from Nov 2017
6918 – 6980 from Nov/Dec 2017
The 50-Day EMA: 7081
7240, from Feb 2018 7300 from Jan 2018
7506 the Jan 2018 all-time high
6796 from Nov 2017
6641 from Oct 2017
The 200-Day SMA: 6557
6477 from Sept 2017
Have a terrific week.