Stock and Bond Bulls Telling Yellen To “Bring It”
In spite of the weak ISM Manufacturing November-2015 (actual @ 48.6 vs. consensus @ 50.5 and prior @ 50.1), the market responded with a robust rally. Regarding December’s impending rate hike, it’s almost as if stock market bulls are telling Fed Chairperson Yellen to “bring it”. However, CNBC’s David Faber made a most salient point earlier today in that the last time the Fed raised interest rates with the ISM below 50 was in August-1985. Anecdotal or fundamental? You be the judge.
Not all the economic data was bad. The PMI Manufacturing Index for November-2015 was solid @ 52.8 vs. consensus @ 52.6 and prior @ 54.1. Construction Spending in October-2015 increased 1.0% mth/mth vs. consensus @ 0.6% and prior @ 0.6%, while annual growth was @ 13.0% vs. prior @ 14.1%.
Tonight’s comments will be brief, but it would be remiss of me not to mention the sharp drop in Treasury rates which gave bonds a much needed boost. Perhaps the bond market is telling Yellen to “bring it” as well.
(Please see performance summary below for further reference on asset classes).
- Trends: ST = short-term; MT = Intermediate-term; LT = long-term
Today the SP-500 broke out to a new 17-day high after seven days of consolidation, which establishes a higher base of price support for the benchmark index. It also closed above its 22-day moving average and it’s next challenge will be to break the resistance of the previous lower uptrend channel, which it failed in its last attempt during early November-2015. Momentum is just beginning to accelerate and the percentage of SP-500 components trading above their 200-day average has crossed into bullish momentum territory. Things should start to get interesting at this point. (If the market fails to break resistance a second time, there is a risk of a more severe correction than the previous one in November.)
Stay Hillbent for the Market Direction…
|Daily Chart Technical Analysis|
|New 5-day highs||205||New 5-day lows||66|
|New 52-week highs||30||New 52-week lows||11|
|Bullish reversals||105||Bearish reversals||29|
|% > 20 M.A.||% > 50 M.A.||% > 100 M.A.||% > 200 M.A.|
|↑ = positive momentum; ↓ = negative momentum; and ↔ = neutral momentum|
Volume Radar Alerts
- Vol % = volume percentage greater than average volume
- SIR = short interest ratio or days to cover
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