| | | Todd Salamone's Monday Morning Outlook, from Shaeffers Research.
Don't Overlook This VIX Seasonality Risk
It could be a slow grind for the stock market until the late July Fed meeting
7/3/2017 8:40 AM
"A sideways grind, with a milder drawdown and resistance in the SPY $244-$245 area into the next Fed meeting in late July, would be considered a best-case scenario... The SPY bottom in late March/early April was at a 61.8% Fibonacci retracement of the close in early February, when the FOMC met and did not raise rates, and the mid-March rate hike. If equities repeat the Fibonacci pattern that followed the March rate hike, support would be in the SPY $240-$241 zone."
-- Monday Morning Outlook, June 19, 2017
A theme that I have repeated over the past several weeks is the uninspiring price action in the immediate weeks following a rate hike -- a phenomenon that has been a constant since the Fed began its tightening cycle in December 2015. Look at a chart with markers showing where a Federal Open Market Committee (FOMC) rate hike occurred, and you can see resistance coming into play around the levels where stocks were trading at the time of those FOMC meetings. You have seen such "proof" in the charts that have accompanied these commentaries for weeks.
A potential scenario that I painted on the Monday following the last rate hike has come to fruition in the two weeks after the meeting, with resistance coming into play for the SPDR S&P 500 ETF Trust (SPY - 241.80) in the $244-$245 area -- site of the pre-FOMC meeting day close, as well as the Fed day close itself.
continues at schaeffersresearch.com |
|
