Markets Selloff Ahead of This Week’s FOMC

by Vlad Karpel

The main U.S. stock market indexes opened mostly lower on Monday, with several sectors, including energy and finance, taking big hits ahead of the last Federal Open Market Committee meeting of 2021. Last week’s inflation figure, COVID variant concerns, and European geopolitical developments are all putting pressure on the market. The $VIX pulled back from recent extreme levels, back to 20. Omicron virus, the inflation CPI numbers, the Fed’s statement this week, can impact the next move in the market. FDX, LEN, and ADBE are key earnings announcements this week that can potentially influence the market direction. All three indexes closed in the red as additional economic reports continue to come in portraying the latest economic impact of the virus, as seen in the late-November selloff. Global travel restrictions and State-issued COVID mandates are causing some concern as the year winds down while vaccine and booster expansion is causing some optimism as they appear effective against the latest variants.

Please watch the critical support levels on the SPY at $462 and then at $456 (a low probability event at this point) as we do expect the market to continue to pull back this week and then rebound toward the end of December. Globally, European markets closed in the red while Asian markets finished with mixed results. We encourage all market commentary readers to maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:

Key U.S. Economic Reports/Events This Week:

  • Producer Price Index (November) – Tuesday
  • Retail Sales (November) – Wednesday
  • Import Price Index (November) – Wednesday
  • Business Inventories (October) – Wednesday
  • Federal Reserve FOMC Announcment – Wednesday
  • Fed Chair Jerome Powell Press Conference – Wednesday
  • Weekly Jobless Claims (12/11) – Thursday
  • Building Permits (November) – Thursday
  • Industrial Production Index (November) – Thursday
  • Capacity Utilization (November) – Thursday

For reference, the S&P 10-Day Forecast is shown below:

Using the “^GSPC” symbol to analyze the S&P 500 our 10-day prediction window shows a near-term mixed outlook. Prediction data is uploaded after the market closes at 6 p.m. CST. Today’s data is based on market signals from the previous trading session.

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Tuesday Morning Featured Symbol

Our featured symbol for Tuesday is Microchip Technology (MCHP). MCHP is showing a steady vector in our Stock Forecast Toolbox’s 10-day forecast.

The symbol is trading at $85.16 with a vector of -2.26% at the time of publication.

10-Day Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.

*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, MCHP. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.


Oil

West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $71.13 per barrel, down 0.75% at the time of publication.

Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $51.44 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.


Gold

The price for the Gold Continuous Contract (GC00) is up 0.15% at $1787.40 at the time of publication.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $167 at the time of publication. Vector signals show +0.28% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.


Treasuries

The yield on the 10-year Treasury note is down, at 1.414% at the time of publication.

The yield on the 30-year Treasury note is down, at 1.801% at the time of publication.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.


Volatility

The CBOE Volatility Index (^VIX) is $20.31 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.


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