Daily Market Update – September 23, 2015 (9:00 AM)
Yesterday, despite the market coming well off of its lows, was still enough of a down day to make Monday’s bounce higher no more than merely a blip.
Following Thursday afternoon’s steep reversal and then Friday’s additional loss after the disappointment of no interest rate increase, analysts were looking everywhere they could to try and explain yesterday’s market action.
I think it was pretty simple and much like the lingering disappointment that may exist when something you wanted very badly failed to materialize.
In a very non-diagnostic kind of way, that feeling is called “the blues” and it’s hard to get into gear.
I think that’s all that the market is suffering from and it isn’t really responding to anything other than being held hostage by that disappointment that things aren’t as good as they needed to be.
Just imagine being told that you weren’t good enough, whether personally or professionally. That’s what the market faced as it was told by the FOMC that the economy wasn’t good enough to warrant that rate increase, even if you had deluded yourself into believing that it was.
That has to make the market wonder, just as people might wonder, whether everything they had believed was a lie.
Did the market deserve to be at such high levels if the economy wasn’t as good as we thought?
So it’s all understandable.
This morning’s futures are flat and again show no sign of following Shanghai, which was down sharply, even as its Premier Xi is trying to convince business leaders in the US that there’s no reason for concern about anything in China nor in the way China does busness internally nor with its international partners.
Those business leaders are likely to have left last night’s meeting somewhat circumspect as they wondered whether the US-China relationship might undergo some sort of a re-set.
At this point separating from China’s markets and from its economy may be a very good thing as they are forced to speed up their evolutionary process and figure out how to re-balance personal freedoms with personal wealth as the latter may be dwindling.
While the futures are flat this morning that disappointment in the FOMC’s decision isn’t likely over, but Friday’s upcoming GDP data release could become the springing off point for another jump higher.
Unlike previous months when a disappointing GDP was met with a happy stock market, because it signaled the continuation of low interest rates, this time around every one wants to see better than expected GDP numbers. The hope is that there will be enough data coming in to prompt the FOMC to increase rates.
With earnings season ready to start in less than 3 weeks the real catalyst would be some evidence of earnings growth, especially if there’s also evidence of revenue growth.
That has been an elusive combination for a while and would really be embraced if the case could be made as those earnings start coming in that sales are increasing and profits are rising.
Until then, we should probably be prepared for more bouncing back and forth between being in correction territory and having escaped correction as markets create a foundation that will either end up serving as resistance or support.
It’s anyone’s guess.