With Federal Reserve intervention virtually assured and decent earnings releases from Intel, CSX, and J.P. Morgan, pre-market equity futures are pointing to a sharply higher open. In fact, virtually every asset class out there looks to be in the green. Though overhead resistance of 1,175 on the S&P 500 is looming, how equities trade around this level will go a long way to letting us know whether another leg of this bull run is materializing.
This morning’s import price report appears to have shown little that would derail the Fed’s plans. For September, import prices fell 0.3%. Most of this decline was attributable to lower oil prices during the month (which have subsequently reversed over the past couple of weeks) and overshadowed the sizable uptick in food prices. Such readings keep the threat of deflation firmly in place and reduce the risks associated with additional Fed action.
Looking to today’s session, 1,175 will be interesting to watch on the S&Ps. Also, I’ll be keeping a close watch on the VIX, the Dollar Index, as well as gold. The VIX, in particular, is signaling, to me, that equity investors are getting way too complacent in here. With the index closing at 18.93 yesterday (after filling the gap left from Monday’s trade) and likely to move lower at the open of trading today, the likelihood of a pullback of some sort is growing by the day. And since equity and gold have been moving in near lock step for the past month, any reversal in equity momentum will likely hit the yellow metal as well. As confirmation of an approaching bottom in the VIX, I will continue to look to see if the Dollar Index continues to maintain trend line support.
Until later…..
No comments:
Post a Comment