Friday the bears reminded us they were still here producing nasty index reversal patterns that broke the 50-day moving averages of the DIA, SPY, and QQQ.  With little on both the earnings and economic calendars to inspire expect choppy price action as wait for the Wednesday rate decision from the Fed.  With nearly 50% of all companies entering their blackout period this week breadth could struggle until the kick of 4^th quarter earnings.

Overnight Asian market closed mixes but mostly lower as they wait on the central bank decisions pending this week.  European markets see red across the board this morning with travel and leisure sectors leading the markets lower.  However, U.S. futures try to hold on to modest overnight gains for a bullish open as we wait with all eyes focused on the Wednesday FOMC decision.

Economic Calendar

Earnings Calendar

Notable reports for Monday include SFIX.

News & Technicals’

House Republicans have released a short-term bill to avert a government shutdown until Oct. 31, as the deadline of Sept. 30 approaches. The bill, known as a continuing resolution (CR), would fund the government at current levels and avoid a lapse in federal services and programs. The bill would also extend several expiring programs, such as the National Flood Insurance Program, the Highway Trust Fund, and the debt limit. However, the bill faces uncertain prospects in the Senate, where Democrats have the majority and have expressed opposition to some of the provisions in the bill. Democrats have criticized the bill for not including funding for disaster relief, Afghan refugees, and health care. They have also accused Republicans of playing politics with the debt limit, which could trigger a default on U.S. obligations if not raised by mid-October. The bill would require 60 votes to pass the Senate, meaning that at least 10 Democrats would have to join all 50 Republicans to support it. If the bill fails to pass both chambers of Congress by Sept. 30, the government will shut down for the first time since 2018.

Streaming has changed how people watch TV and movies, but it has also hurt the media industry. Old media companies have launched their streaming platforms, but they have not made money or matched Netflix’s success. Streaming costs a lot, earns little, and faces many problems. Streaming also affects how writers and actors are paid and what kind of content is made. Hollywood is still trying to figure out how to make streaming work.

Health insurance prices, which have been falling for almost a year, are expected to reverse course and start rising from October, adding to the inflationary pressures in the U.S. economy. According to economists, health insurance prices have been declining roughly 3% to 4% a month since October 2022, due to a temporary change in the way the Bureau of Labor Statistics (BLS) calculates the consumer price index (CPI) for health insurance. The BLS uses a proxy measure based on the medical care services component of the CPI, which has been subdued by the pandemic and the expansion of telehealth. However, starting in October, the BLS will resume using its pre-pandemic methodology, which is based on actual revenues reported by health insurers. This means that the CPI for health insurance will start rising just over 1% month over month for a year, reflecting the higher premiums and fees charged by insurers. Health insurance accounts for about 1.2% of the overall CPI basket, so this change could add about 0.15 percentage points to the annual inflation rate. This could pose a challenge for the Federal Reserve, which is trying to balance its dual mandate of price stability and maximum employment amid the uncertain recovery from the COVID-19 crisis.

With the UAW on strike, and bond yields rising the bear made their presence known on Friday producing nasty index reversal patterns that failed 50-day morning averages.  This week we begin entering the corporate blackout period for nearly 50% of the companies which could have a substantial impact on market breadth for the rest of September.  Today we have very earnings and economic calendars making it difficult for bulls or bears to find much inspiration, especially with the looming FOMC decision coming Wednesday afternoon.  Plan for choppy price action that could whip between support and resistance levels as wait. 

Trade Wisely,

Doug