Markets Performance / Current Trading Range

  • We had an explosive week in the markets this past week, as the benchmark S&P 500 rose +3.3% from 1,951 on Friday, 10/2 to 2,015 on Friday, 10/11.
  • The S&P 500 is up roughly +8% or over 140 points from its recent support level lows of ~1,870 (last seen on 9/29 and 8/25), with the majority of this major move (~90 points or +5%) actually coming on the heels of the previous Friday’s jobs report.
  • While the U.S. markets surged on the week, it’s important to note several key points:
    • A short-squeeze was likely a major contributor to the markets moving higher.
    • Relative performance overseas was even more impressive.
      • The S&P 500 was actually the worst performer amongst other major world markets:
      • German DAX up +6%, French CAC 40 and UK FTSE up +5%, Hang Seng and Shanghai Composite up nearly +4.5%, and the Japanese Nikkei up +4%.
    • On the technical front, the S&P 500 has only returned to the upper end of its current trading channel (1,870 – 2,020).
  • Despite the global economic slowdown and deflationary headwinds, commodities also had another stellar week.
    • WTI crude oil back near $50/barrel
    • Explosive moves higher in: zinc, copper, aluminum, nickel, lead, silver, and gold
    • U.S. dollar at 3-week lows vs. the euro

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 (*currently testing resistance levels), 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

  • Earnings are in full-focus with much of the attention on the banking sector along with 36 S&P 500 companies due to report throughout the week.
  • FED officials will be speaking again throughout the week, as market participants continue to listen in for additional clarity on monetary policy direction.
  • FOMC Decision on Interest Rates
    • October 27-28
    • December 16 (with Press Conference)
  • It is a heavy economic data week (retail sales, PPI and CPI, initial jobless claims, Empire manufacturing, industrial production, and University of Michigan sentiment report, etc.)


  • Negative Interest Rates (NIRP) – A negative interest rate policy (NIRP) is an unconventional monetary policy tool whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent (Investopedia, 2015). 
  • Short Squeeze – A situation in which a heavily shorted stock or commodity moves sharply higher, forcing more short sellers to close out their short positions and adding to the upward pressure on the stock (Investopedia, 2015).


Bartiromo, Maria. (2015). Rickards: Fed is lousy at seeing bubbles, they never see them. Fox Business: http://video.foxbusiness.com/v/4539331788001/rickards-fed-is-lousy-at-seeing-bubbles-they-never-see-them/?playlist_id=3166411554001#sp=show-clips

Bartiromo, Maria. (2015). Time to invest despite lack of earnings growth? Fox Business:


Boesler, Matthew. (2015). Kocherlakota Says Fed Should Consider Negative Interest Rates. Bloomberg: http://www.bloomberg.com/news/articles/2015-10-08/kocherlakota-says-fed-should-consider-negative-interest-rates

Durden, Tyler. (2015). “It’s Not A Risk-On Rally, This Is The Biggest Short Squeeze In Years” Says Bank Of America. Zero Hedge: http://www.zerohedge.com/news/2015-10-09/its-not-risk-rally-biggest-short-squeeze-years-says-bank-america

Durden, Tyler. (2015). Stocks Soar To Best Week In A Year On “Mother Of All Short Squeezes”. Zero Hedge: http://www.zerohedge.com/news/2015-10-09/stocks-soar-best-week-year-mother-all-short-squeezes

Herron, J., Tilles, D. Global Stocks Post Best Week Since 2011 as Commodities Rally. Bloomberg: http://www.bloomberg.com/news/articles/2015-10-08/asian-futures-signal-more-stock-gains-to-come-with-oil-near-50

Icahn, Carl. (2015). Danger Ahead. http://carlicahn.com/

Kazuhiro, Kida. (2015). M&A Deals Hit Blistering Record Pace. Nikkei Asian Review: http://asia.nikkei.com/Business/Trends/M-A-deals-hit-blistering-record-pace

Mintz, S.L. (2015). Stock Buybacks Prepare for the Bear Market. Institutional Investor: http://www.institutionalinvestor.com/article/3495918/research-and-rankings/stock-buybacks-prepare-for-the-bear-market.html#.VhvGY_lVhBc

Orszag, Peter. (2015). Is the Global Economy Ready for Negative Policy Rates? Bloomberg: http://www.bloomberg.com/news/videos/2015-10-12/is-the-global-economy-ready-for-negative-policy-rates-

Pento, Michael. (2015). One Step Back from the Ledge, but Still Threatening to Jump. Pento Portfolio Strategies LLC: http://pentoport.com/blog/

Ro, Sam. (2015). Here’s your preview of this week’s big market-moving events. Business Insider: http://www.businessinsider.com/monday-scouting-report-oct-12-2015-2015-10

Robb, Greg. (2015). Fed officials seem ready to deploy negative rates in next crisis. Market Watch: http://www.marketwatch.com/story/fed-officials-seem-ready-to-deploy-negative-rates-in-next-crisis-2015-10-10

Schaefer, Steve. (2015). Why A $94 Billion Headwind To Corporate Earnings May Start Easing. Forbes: http://www.forbes.com/sites/steveschaefer/2015/10/09/why-a-94-billion-headwind-to-corporate-earnings-may-start-easing/

Schiff, Peter. (2015). Ep. 112: Fed Worried Cost of Living Not Rising Fast Enough: https://www.youtube.com/watch?v=iM0d7FXdbWo

Short Doug. (2015). World Markets Weekend Update: Best Week of 2015. Advisor Perspectives: http://www.advisorperspectives.com/dshort/updates/World-Market-Snapshot.php

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