Markets Performance / Current Trading Range

  • It was another volatile week on Wall Street this past week, with the S&P 500 trading between a nearly 80 point range (over 530 points for the DOW).
  • The S&P 500 closed out 3Q on Wednesday (down 6.9% for the quarter – worst quarter since 2011), but finished the week in the green for the first time in three weeks, rising +1% from 1,931 on Friday 9/25, to 1,951 on Friday, October 2.
  • Today (Monday 10/5), the benchmark index gained another 36 points (or +1.8%) to close at 1,987.
    • Today marked the fifth up day in a row for the S&P 500, its longest win streak all year.
  • While risk-on returned in equities to cap off the week, traders are beginning to seek safe havens in different industry segments and asset classes that are worth noting:
    • Utilities industry sector
    • Treasury market
    • Commodities – deflationary/inflationary forces

Recent Trading History

  • Continuing on the technical front, it has become increasingly clear that the former support levels for the S&P 500 (1,980-2,000) from late 2014/early 2015, are now acting as strong resistance for the market, as the benchmark index has failed on several occasions since late August to push above this key threshold – not to mention, still trading below the all-important 200-day moving average.
  • The S&P 500 was range-bound (nearly 100 point range) for roughly three months (May-July), trading sideways between 2,040 and near record territory of 2,120, before falling convincingly below the 200-day moving average in late August.
  • Volatility has increased since late August, as the S&P 500 dropped as much as -12% to a recent low of 1,867 (level last seen in October of 2014).
    • 500-1,000 point intraday swings are once again occurring on a more regular basis.

Market Drivers (*Level of Importance/Weight in Descending Order/Bold Discussed in Audio Podcast)


  1. Federal Reserve’s Interest Rate Hike
  2. Continuation of Risk-On/Risk-Off
  3. Chinese Economy Slowing / Market Turmoil


  1. Economic Data
  2. Corporate Earnings
  3. Currency Wars
  4. Global Debt Levels
  5. Geopolitics and Terrorism

Major Events on the Horizon

  • Once again, we have multiple FED officials speaking this week, with traders again listening in for the timing of a potential rate hike:
    • FOMC Member John Williams Speaks both Tuesday and Thursday.
    • On Friday, we’ll hear from Dennis Lockhart and Charlie Evans.
    • Also, we’ll have the FOMC minutes from September’s meeting coming out on Thursday.
  • FOMC Decision on Interest Rates
    • October 27-28
    • December 16 (with Press Conference)
  • China has been closed for the past week for National Holidays – on Wednesday (10/7) Chinese markets will reopen.
  • Earnings season beginning in full force next week, but this week we’ll hear from PepsiCo, YumBrands, Monsanto, and Alcoa.


Reflationary Trade – Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes, seeking to bring the economy (specifically price level) back up to the long-term trend, following a dip in the business cycle (Wikipedia, 2015). If the Fed goes back to stimulus instead of raising rates, we could see a reflationary trade begin again, as the dollar sells off, and commodities and equities rise. This, of course, will be in the face of major deflationary global forces.



Alloway, T., Keene, T., McKee, M. (2015). Copper, Junk Bonds: What’s Moving Markets. Bloomberg:


Alpher, Stephen. (2015). Atlanta Fed GDP tracker tumbles. Seeking Alpha: http://seekingalpha.com/news/2807086-atlanta-fed-gdp-tracker-tumbles

Armstrong, Martin. (2015). Today’s Turning Point on the ECM. Armstrong Economics: http://www.armstrongeconomics.com/archives/37591

Bartash, Jeffry. (2015). U.S. hourly wages flat in September, up 2.2% in past year. MarketWatch: http://www.marketwatch.com/story/us-hourly-wages-flat-in-september-up-22-in-past-year-2015-10-02

Burger, Dani. (2015). Bad August, Worse October Is Nothing New for U.S. Equity Routs. Bloomberg: http://www.bloomberg.com/news/articles/2015-09-30/bad-august-worse-october-is-nothing-new-for-u-s-equity-routs

Cashin, Art. (2015). Cashin: This is not going to be a pleasant Christmas. CNBC: http://www.cnbc.com/2015/10/02/cashin-this-is-not-going-to-be-a-pleasant-christmas.html

DiChristopher, Tom. (2015). Big layoffs may signal end of expansion: Challenger. CNBC: http://www.cnbc.com/2015/10/01/us-layoffs-surge-43-in-sept-to-58877-challenger.html

Durden, Tyler. (2015). Another Regional Fed Survey Collapses – ISM Milwaukee Crashes To 2009 Lows. Zero Hedge: http://www.zerohedge.com/news/2015-09-30/another-regional-fed-survey-collapses-ism-milwaukee-crashes-2009-lows

Durden, Tyler. (2015). If You Work Here, Quit Before You Are Fired: The 20 Largest US Layoff Announcements Of 2015. Zero Hedge: http://www.zerohedge.com/news/2015-10-01/if-you-work-here-quit-you-are-fired-20-largest-us-layoff-announcements-2015

Durden, Tyler. (2015). Nothing Happening Everything Awesome Crowd. Zero Hedge:


Durden, Tyler. (2015). Stocks, Commodities Surge On ‘QE4 Hope’ After Chicago PMI Collapse. Zero Hedge: http://www.zerohedge.com/news/2015-09-30/stocks-commodities-surge-qe4-hope-after-chicago-pmi-collapse

Gillespie, Patrick. (2015). In setback, U.S. adds only 142,000 jobs. CNN Money: http://money.cnn.com/2015/10/02/news/economy/us-economy-september-jobs/index.html?section=money_markets

Kawa, Luke. (2015). Citi: The Fed May Have Kept Policy too Loose Because of Faulty Data. Bloomberg:


Kelly, Lorcan R. (2015). Bond Markets Probably Aren’t Telling the Fed Much About Inflation Expectations. Bloomberg: http://www.bloomberg.com/news/articles/2015-09-30/bond-markets-probably-aren-t-telling-the-fed-much-about-inflation-expectations

Oyedele, Akin. (2015). MIDWEST FLOP: CHICAGO PMI SIGNALS CONTRACTION. Business Insider: http://www.businessinsider.com/here-comes-chicago-pmi-2015-9

Schiff, Peter. (2015). Sept. Jobs Report Confirms Weakening Labor Market. https://www.youtube.com/watch?v=aVp8fJaQS-M

Speciale, Alessandro. (2015). ECB Said to Plan Fed-Style Rules in Shakeup After Coeure Speech. Bloomberg: http://www.bloomberg.com/news/articles/2015-09-30/ecb-said-to-plan-fed-style-rules-in-shakeup-after-coeure-speech

US GDP Growth Rate by Quarter: http://www.multpl.com/us-gdp-growth-rate/table/by-quarter

Varney, Stuart (2015). Dent: This is just first wave down for markets. Fox Business:


One comment

  1. Rick Majos · · Reply

    Nice Job. You are hitting your stride. Uncle Rick

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