Equity Traders Like FOMC “Fedspeak”
Today’s Spotlight Market
U.S. consumers are in a good mood as we enter the holiday season, as the Bloomberg Consumer Comfort Index rose to a 7-year high. Lower oil prices have finally relieved some of the ?pain at the pump? faced by consumers the past several years, which should put additional dollars in their pockets just in time for holiday shopping.
Fundamentals
Equity bulls received an early holiday present courtesy of the Fed, as the major U.S. stock indices have rallied sharply following the end of the December FOMC meeting. Analysts were keenly focused on any changes in the wording of the policy statement as well as what Fed Chairwoman Janet Yellen would say in the post-meeting press conference. That is where, on the surface, the interest rate picture remained cloudy. While it still appears that the Fed is prepared to finally raise short-term interest rates in 2015, it will not be early in the year if you believe Chairwomen Yellen who stated that the Fed would be unlikely to begin raising rates for ?at least the next couple of meetings?. That would put the April 2015 FOMC meeting in the spotlight for the first movement on interest rates. However, the potential velocity on any interest rate increases may have slowed, as the median forecast for interest rates by members of the FOMC was lowered to a 1.125% Fed Funds rate by the end of 2015, vs. 1.375% in the previous meeting. By 2017, the expected Fed Funds rate is 3.625%, which is lower than previous forecasts. Market reaction was mixed following the meeting, with Equity Indices and the U.S. Dollar rallying, but U.S. Treasuries and the Euro moving lower. ?
Technical Notes? -? View Today’s Chart
During times of increased market volatility, it is wise to take a look at the ?big picture? of the direction of a market in order to filter out the daily ?noise? that can negatively affect a trader?s confidence about holding a position. So today we are looking at the monthly continuation chart for the E-mini S&P 500 futures. If we assume that the start of the recent bull market leg began at the March 2009 lows, prices are showing few signs of a potential long-term change in trend. Even the steep declines seen in October of this year did little to alter the intermediate trend that started at the October 2011 lows. Resistance for the lead month future continues to be at the all-time highs of 2079.00, with support seen at the Oct. 2011 uptrend line, which for the month of December is near the 1850.00 price level.
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