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Market Recap April 26, 2016 – FOMC Preview

April 26, 2016

By | 3 Comments

MARKET SNAPSHOT
Dow17979.17+2.06(0.01%)
Nasdaq4885.64-10.15(-0.21%)
SP 5002090.39+2.60(0.12%)
10-yr Note-5/321.936
NYSEAdv 2264Dec 715Vol 601.46 mln
NasdaqAdv 1755Dec 1056Vol 1482.04 mln

 

 

IN THE NEWS HIGHLIGHTS:

  • Fed begins two-day policy meeting.
  • Oil gains big overnight and throughout the day.
  • Financials and industrials outperform
  • Health care and tech drag market down.
  • Earnings season wears on. Major companies to report after hours include AAPL, EBAY, CMG, TWTR, with MMM performing poorly before the market open.

 

RECAP– As expected, the market did not move much on below average volume ahead of the FOMC Statement tomorrow. All movement was largely sideways on an intraday chart with a total of a 0.12% move up. All this despite a sharp gain from crude oil of 3.31%.

In-depth look of daily news at Briefing.com (CLICK HERE)

In-depth look at after hours movers (CLICK HERE)


Economic Calendar

Today

  • Core Durable Goods: Actual -0.2%   Forecast  +0.6%   Previous -1.3%.
    • This stat measures the change in the total value of new purchase orders placed with manufacturers month over month. Coming in negative is bad enough, only to be compounded further by last month’s number being revised downward to -1.3%.
  • CB Consumer Confidence: Actual – 94.6   Forecast – 95.8   Previous – 96.1
    • A survey used to gauge the confidence of consumer spending and to estimate future economic activity.


Upcoming Reports

  • April 27: Crude Oil Inventories (watch out for this as last week’s report sparked a bull run)
  • April 27: FOMC Statement (“The Granddaddy of them All.” This is going to be the major market mover of the week. Look out for a possibly hawkish statement as many traders and economists expect a rate rise in June and are looking at the language of this report to give them a hint.)
  • April 27: Federal Funds Rate (A rate rise this month is highly unlikely. Traders will be looking at the language in the statement as a hint for the June 15 meeting.) 
  • April 27: Monetary Policy Statement from the Bank of Japan (Might as well put this in bold as well since the Japanese central bankers do tend to surprise, and shock, the world with their monetary policy. The most aggressive of Central Banks, they have in the past announced massive levels of Quantitative Easing without notice and most recently have been the first central bank to announce negative rates. With the BoJ, you could always expect the unexpected.)

 

FedWatch Rate Hike on Probability for April 26: 0.0% (View the probability chart here)


A Look At The S&P 500 Chart – KEY Levels

  • Short term Support above 2070. The next level of support is at the 2040 range and then critical support is located between 2000-2005 .
  • Resistance at current levels up to 2105.
  • Below average daily volume (in anticipation of the FOMC Statement tomorrow).
  • Traded in a very tight range today.

 


A Look Into the Heat Map

 

Despite clear strength being shown in the energy sector after Crude Oil’s run up today and a rebound from Financials and Industrials, the market was kept grounded by weak performance from large cap Tech stocks and with further help from Healthcare. In addition, Consumer Goods took a big hit today as Proctor and Gamble (PG) announced total global sales volume declines (for a 7th consecutive quarter) despite beating earnings estimates.

MARKETS

(click on symbol for chart)
SPX –  Bull
DOW Bull
Nasdaq Bull
Russell  Bull

VIX – 13.96 – Bear

 COMMODITIES

Oil (USO) –  Bull (Crude Oil bounced off of yesterday’s support at 42.5 and rebound strong today. Very important to trade this carefully ahead of tomorrow’s EIA Petroleum Report/Crude Inventories)
Ag (DBA) – Bear
GLD –  Bull
SLV –  Bull (Silver Futures, /SI, are showing to be holding steady at a strong resistance level above 17. Note the long wicks on the candlesticks for the past week and its inability to close above 17.25. Don’t expect much further movement after today’s action until after the FOMC Statement)

THE DOLLAR

UUP USD weighted ETF – Bear (The Dollar Index, /DX, has been in a strong bearish slump since the beginning of December. Now the chart is forming a low base at a historic support level of 94 that it has rarely traded under for the past year and a half. Tomorrow is going to be a critical day for the USD, one way or the other as it currently sits at a “Make or Break” point.)

DX

 


SOLON’S TRADING THOUGHTS

I don’t know how many times I have to reference “FOMC Statement” in one Market Recap for a new trader to realize that this is kind of a big deal. Due to all the different types of correlations in the market (FOMC to the Dollar, the Dollar to Commodities/Oil/Gold/Silver, the Dollar and Oil to the S&P 500, the Dollar and its effect on international trade) all trading tomorrow begins and ends with that statement. If there is below average volume with little movement today, indicating a lack of participation from larger traders and institutions, you can bet that those same institutions are positioning themselves according to the release of the statement. Stay safe in your trading tomorrow. If you have any high risk trades, consider taking profits. Also make sure to have your portfolio hedged ahead of the event as Volatility is still relatively low.


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3 Replies to “Market Recap April 26, 2016 – FOMC Preview”

  1. KEITHGIUNTA KEITHGIUNTA says:

    Thanks Solon. I agree. Let’s be careful out there.

  2. FrancesK FrancesK says:

    Thanks for the recap, Solon! Wonder what this FOMC meeting will do…

  3. Avatar ERICSIMMS says:

    Great recap, Solon! It will be an interesting week, indeed.

Comments are closed.

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