Weekly Market Update – 19 June 2017 BMO

Weekly Market Update – 19 June 2017 BMO

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The stock market was fairly flat this week, especially in the second half, as investors chewed on a host of headlines, most notably of which was the FOMC’s latest rate-hike decision. The S&P 500 registered three losses and a new record high this week, eventually settling with a slim gain of 0.1%. The Dow (+0.5%) and the Nasdaq (-0.9%) settled on opposite sides of the S&P 500.

After plunging nearly 3.0% last Friday, the top-weighted technology sector registered another notable decline in the first session of the week, losing 0.8%, as mega-cap names like Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), and Facebook (FB) weighed. Amazon (AMZN) also underperformed, but the consumer discretionary sector, like the S&P 500, was able to escape with just a slim loss.

The tide turned in the bulls’ favor on Tuesday as the aforementioned companies bounced back from their two-day declines. The technology and consumer discretionary sectors led the advance, pushing both the benchmark index and the Dow to new record highs. However, the S&P 500’s gain was capped at 0.5% as investors approached Wednesday’s FOMC rate decision with caution.

As expected, the FOMC voted to raise the fed funds target range by 25 basis points to 1.00%-1.25% in the midweek session. The vote was nearly unanimous with Minneapolis Fed President Neel Kashkari being the lone dissenter. In addition, the Fed laid out a specific plan for how it will start to normalize its balance sheet and revealed that the median FOMC member expects one additional rate hike in 2017.

The Treasury market held a big gain going into the decision, underpinned by weak CPI and retail sales readings for May, but gave back a portion of that advance in the aftermath. However, in the equity market, the S&P 500 hardly deviated from its unchanged mark as investors continued to digest the Fed’s policy prescription into the closing bell and beyond.

Equity indices opened solidly lower on Thursday as the market continued to debate whether the Fed might be tightening policy too much and/or too fast. In addition, sentiment was dampened by a Washington Post report that claimed Special Counsel Mueller’s investigation of Russia’s interference in the U.S. election is broadening in scope to examine whether President Trump tried to obstruct justice.

The technology and consumer discretionary sectors showed relative weakness, yet again, on Thursday morning. However, the two groups were able to reclaim a good portion of their losses as the day went on. A positive performance from the industrial sector, which was led by names like Caterpillar (CAT), General Electric (GE), and Boeing (BA), helped keep the S&P 500’s loss (-0.2%) in check.

On Friday, Amazon (AMZN) dominated the headlines after announcing that it plans to acquire Whole Foods Market (WFM) for $42 per share in cash. Big-box retailers like Wal-Mart (WMT), Costco (COST), and Target (TGT) plunged on the news, sending the consumer staples sector to the bottom of the day’s leaderboard. However, the S&P 500 still managed to eke out a slim victory.

It’s also worth pointing out that WTI crude settled the week with a loss of 2.4% following a bearish EIA inventory report on Wednesday, which showed a smaller than expected draw of 1.7 million barrels (consensus -2.5 million barrels) in crude stocks and a build of 2.1 million barrels in gasoline inventories for the week ended May 9. The tumble left the commodity at its worst level since early November.

Despite the Fed’s call for a third rate hike in 2017, the fed funds futures market points to the March 2018 FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 50.8%, down from last week’s 60.7%. The implied probability of a December rate hike sits at 43.4%, down from last week’s 51.7%.

(Excerpts from Briefing.com)

Dollar

Bonds yields: The yield curve flattened dramatically over the week as the longer maturities saw a flight to safety.

Commodities: WTI Crude closes higher, Metals close lower. 

Agriculture

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Wk25forJUNE THE WEEK AHEAD

Looks like a bearish week ahead and with plenty of reasons to be.

Monday 19 June to Friday 23 June (Week 25)

The twenty-fifth week of 2017 (wk25) is bearish for the DIA and the SPY over all the 5, 10 and 15 year averages with more than 80% reliability. 

The 2017 Stock Trader’s Almanac’s averages (based on 21 years) for week 25;

Screen Shot 2017-06-18 at 1.50.16 PM

Key Economic Dates

Mon 19 June

Tue 20 June

Wed 21 June

Thu 22 June

Fri 23 June

SUMMARY

With such bearish statistics for the coming week, the long trade is definitely out of the question. However, it will only be for a week as the last week of June often sees bullish spikes as a result of the Portfolio Pumping phenomenon.

On the economic front, The Little Red Dot will be anticipating some sort of fall out from THAT Family dispute that has inadvertently dragged some big named ministers into the fray. The boss gets back to work on Monday so watch the SGD for the first signs of any fall out. This is not just going to be a family issue – the economic fall out if this thing if not handled properly, can have serious long-term ramifications with regard to investor confidence knowing that a ministerial committee can be convened at any time to take away your most basic human or even corporate rights without due process.

I am praying that those in power do the right thing for the greater good rather than personal gain or pride.

Screen Shot 2017-06-18 at 5.26.05 PM

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And don’t forget:

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I will be hosting my very first independent Preview Session for the Pattern Trader (Singapore) Tutorial’s upcoming batch in August:

Date: Tuesday, 20 June 2017
Time: 07:00pm to 10:00pm (registration starts at 06:30PM)
Venue:
51 Cuppage Road,
Acc EduHub #03-03

Vibrant Room 3
Singapore 229469
(behind The Centrepoint & next to The Holiday Inn Hotel)

For Tutorial details, go here: PTT91 in Singapore

REMEMBER to book your free complimentary HERE: INTRODUCTORY SESSION TO MACROTRADING

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Pattern Trader Tutorial’s upcoming batch in Penang will run between 30 August and 04 September 2017. We have arranged to have a Preview Session for this;

Date: Thursday, 22 June 2017
Time: 07:00pm to 09:30pm (registration starts at 06:30PM)
Venue:
YMCA Penang, Rm Grace 1
211 Jalan Macalister
George Town 10400
Pulau Pinang

For Tutorial details, go here: PTTPG06 in Penang.

Write to: support@patterntrader.com to book your seat.

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