NASDAQ Composite (.IXIC) retreats from record ahead of Fed meeting
Stocks finished mixed Monday, with declines in financials and communication-discretionary sectors preventing the S&P 500 and Nasdaq from scoring fresh record closes.
How did major benchmarks fare?
The Dow Jones Industrial Average DJIA, +0.11% gained 28.90 points, 0.1%, at 27,221.35, while the S&P 500 index SPX, -0.16% shed 4.89 points, or 0.2%, to 3,020.97, led by a 0.8% decline in the financials XLF, -0.77% and a 0.6% fall in consumer-discretionary shares.
Meanwhile, the Nasdaq Composite Index COMP, -0.44% gave up 36.88 points, or 0.4%, to end at 8,293.33.
What drove the market?
Stocks wavered throughout the session, as investors digested a barrage of corporate quarterly earnings reports, news on tariff talks and an all-important Fed decision.
Face-to-face trade talks between China and U.S. officials are set to resume Tuesday in Shanghai, marking the first such meeting on tariffs since President Donald Trump and China’s President Xi Jinping met on the sidelines of the Group of 20 gathering in Osaka, Japan, in June.
Investors have been watching for signs of progress toward a trade deal, but expectations for a breakthrough are low, as there have been few indications that either side is willing to back away from demands that derailed a previous round of negotiations in May.
The fresh talks come as the market is awaiting an almost-certain interest-rate cut from the Fed and a news conference where Fed Chairman Jerome Powell will brief markets on the health of the U.S. economy and the outlook for policy.
As of late Monday in New York, the market was pricing in a nearly 76% chance of a 25-basis-point rate cut based on federal-funds futures trade, and a 24% chance of a 50-basis-point reduction to benchmark rates, currently in the 2.25%-2.50% range, according to CME Group data.
Kristina Hooper, chief global strategist at Invesco, said “we need to consider implications of the Fed’s decision this week in particular, and greater monetary policy accommodation in general,” in a Monday research report. “It seems appropriate to refer to the playbook created by the Global Financial Crisis (GFC) for some guidance. During the GFC, central bank actions altered risk and reward profiles and created a yield scarcity in markets that lasted for years, and which I believe is likely to intensify, given that central banks are turning more accommodative,” she wrote.
The Fed decision will be followed by a key report on employment that could also offer further guidance on the state of the labor market and the domestic economy.
Beyond monetary policy and trade talks, the market also digested deal news. The London Stock Exchange Group said it was in advanced talks to acquire Refinitiv, a financial data and trading platform provider in a deal valued at $27 billion, while Pfizer Inc. PFE, -3.81% announced a deal to merge its off-patent drug business with generic drugmaker Mylan Inc. MYL, +12.57% , which had been reported by the Wall Street Journal over the weekend.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 7,961.96.
The projected upper bound is: 8,508.64.
The projected lower bound is: 8,093.83.
The projected closing price is: 8,301.23.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 71.6910. This is not an overbought or oversold reading. The last signal was a sell 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 61.00. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 38 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 107.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 7 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -36.882 at 8,293.329. Volume was 7% below average (neutral) and Bollinger Bands were 48% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 8,240.09 7,941.59 7,537.46
Volatility: 13 17 26
Volume: 502,565,152 559,536,640 588,075,072
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
NASDAQ COMPOSITE is currently 10.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 29 periods.