Temporary Stalemate?

Asia modestly higher overnight and European markets modestly lower the US Futures seem to have reached a temporary stalemate suggesting a flat open.  I’m expecting an oddly slow and choppy morning with both the bulls and bears struggling to find inspiration.  With the 4^th quarter earnings season perhaps they are simply content to wait with the potential interest rate increase impacts starting to weigh heavily on the mind of the market.

Certainly, a rally to test resistance is possible, but there seems to be an equal chance that a retest of recent lows.  Stay very focused on price action as a stalemate like this can suddenly spring to life and is very susceptible to head fakes and whipsaws.  With earnings season just around the corner, we should expect higher volatility to stick around for several weeks.  Plan your risk carefully.

On the Calendar

Hump-day on Economic Calendar begins with the Mortgage Applications at 7:00 AM Eastern.  At 8:30 PM the PPI at 10:00 AM expects a rise of only 0.2 percent for the September headline number.  We have the Atlanta Fed Business Inflation Expectations as well at Wholesale Trade number at 10:00 AM.  A 3-yr Note Auction @ 11:30, Fed Speaker a@ 12:15 PM, 10-yr Note Auction @ 1:00 PM, and another Fed Speaker at 6:00 PM to close the calendar day.

On the Earnings Calendar, we have eight companies reporting the most notable, FAST, stepping up before the bell today.

Action Plan

A very choppy day yesterday as the market seemed content to consolidate near recent lows as the market becomes increasingly concerned about the effects of the FOMC rate hikes.  I think the bigger concern is that Earnings Season begins next week and companies have a lot of live up to at current valuations.  As a result, increased volatility is likely over the next few weeks with big morning gaps and challenging price action.

With Asian markets having closed modestly higher across the board overnight and European markets currently down across the board, US Futures seem a bit confused as to what to do this morning.  As I write this, the Dow Futures are currently dead flat.  Perhaps the PPI number at 8:30 AM Eastern will give the market some inspiration, but as of now, I’m planning for a very slow and choppy morning.  After that its anyone’s guess.

Trade Wisely,

Doug