Can Stocks Finish In The Black?
Today’s Spotlight Market
The S&P is close to break-even for the year, down only 1.69%, but will the index be able to finish the year on a positive note and finish in positive territory? Other than the August crash and subsequent recovery, it has been a relatively uneventful year for stocks. Corporate earnings have leveled off some and much of the year was spent on Fed watch. Nevertheless, ending the year on a positive note may give stocks a bit of a boost come the new year.
Fundamentals
The Great Recession has been followed by an equally painful period of slow recovery. Employment and housing, both key components of the economy, had a relatively good, but not great, year. When looking at other factors, such as the lower cost of petroleum and the Fed delaying rate hikes until December, traders can make an argument that employment and manufacturing should have performed much better than they had in 2015. This is the reason the Fed had delayed the interest rate increase until December and have not come close to committing to additional rate hikes. In fact, traders are only pricing in a 51% chance of a rate increase by April. Corporate earnings seemed to have plateaued, which is why traders are predicting single digit gains for the S&P in 2016.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the March e-mini S&P bouncing back after closing below the 2000 support level this past Friday. It looks as though the chart is close to confirming a possible double top formation. If the pattern is confirmed, prices may test the 1900 level on the downside. This is within earshot of the lows reached in late August and again in late September. Prices may find resistance near the 2045 level. For the market to regain some upward momentum, prices may need to break out above the 2100 level.
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