Last two days of the past week brought bearish sentiment into the market. Many investors are asking themselves whether this is beginning of something serious or it is just pre - FED's meeting fever. Next week Fed's meeting regarding a rate increase definitely has some impact on the market. Taking into account that last strong corrections in September 2015 and January 2016 occurred right after FED increase rate announcements, we should not ignore the next week event. In September of 2015 the investors were disappointed that the rates were not increased. In December of 2015 investors were scared the rate was increased. What is it going to be now??? When we take a look at the Breadth charts of the major US Indexes we may see that the market remains bullish - there were not a lot of damage done to the Bulls. The dominance of the Bullish stocks remains strong. Current market date are much better than it was before December's FED meeting and especially before September's FED meeting. As of 06/10/2016, there are 61.7% of the bullish (traded closer to their 52-week highs) stocks in the NYSE Composite index, 67% of the S&P 500 stocks and 83% of the DJI stocks are also traded closer to their 52-week highs These are quite strong numbers in the favor of the Bulls (see Breadth charts below). The number of the bullish stocks on the Nasdaq 100 index is smaller - only 59%. On the Russell 2000 index the Bears took over the Bulls, not strongly, only by a few stocks. Overall we may say that the Breadth data are strongly Bullish on the NYSE Composite index and at this point of time it is too premature to make any call about a possibility of any serious move down. Yes, we may see the continuation of negative trading before and after FED's rate meeting. Yet, at this point of time I see nothing to panic about. On the other hand it could be recommended monitor next week market reaction o the FED rate increase announcement, by paying special attention to the Russell 2000 index.Russell 2000 index xommrised of small-cap stocks which were always quite sencetive to investors sentimen. It is common for Russell 2000 index to drop firts before any strong market decline - in uncertain time the investors are getting rid of small cap stocks before they start to sell large cap stocks listed in the DJI and S&P 500. Chart #1: DJI index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks Chart #2: S&P 500 index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks Chart #3: Nasdaq 100 index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks Chart #4: Russell 2000 index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks Chart #5: NYSE Composite index High-low Breadth chart - green line represents bullish stocks and red line represents bearish stocks charts courtesy of: http://www.marketvolume.com
I think your answer is in the last jobs report.....that's going to be there excuse for not raising rates this June meeting....like i said even if they raise rates to .5% or 1% by the end of 2016 they will all be taken back at the next fed emergency meeting when the markets go into bear mode and the economy is in a full recession......the fed is hoping and wishing to get rates to 1% so they can have room to cut rates again once the recession comes because right now the risk of NEGATIVE INTEREST RATES going forward in the next 18-24 months is very high.