Monday, September 26, 2016

Wrestlemania Risk Tonight

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Election debates could affect markets.
PCE Friday is also critical and can change the Fed's view on rate hikes.
Two events this week carry with them meaningful market implications.

There are no straight lines for markets these days. After a fast strong bullish move we think the markets can hold off this week and maybe sell off. We take these moves step by step. Here are the recent calls.
Source: Interactive Brokers

On August 31st we said that the market was "showing cracks." We said a close below the above line (NYSEARCA:SPY) 217.68 would be a warning of downside. The next day the market closed below that line for a second day. Five days later the market officially "cracked"
At 10am on September 12th we said shorts should "take profits." After that the market ripped much higher.
On September 20th we said the "markets hold and go higher." It was one of our few bullish calls in a while.
Premarket on September 21st we said the market "wants to go up." The open that day was 214.24. That was Fed day. SPY closed that day at 216 and the next day reached 217. We're not sure the market liked the Fed or if it just wanted to go up, as we said. You can always attach any reason you want for the moves, but in any case, it "wanted" to go up and did.
That was then. What about this week?
This week we're a little worried about markets for two reasons.
1. The election debates
2. PCE
Election Debate Risk
We have not dabbled much in politics except for a report July 29th where we showed potential Fed election bias. This has been a hot topic of late. In that report we showed that many Fed officials worked for or are vying to work for a Clinton.
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