03 December 2015

SP 500 and NDX Futures Daily Charts - Stocks Fall On Economy, Rate Hike Prospect

Stocks were in selling mode today, as the markets gave back last weeks Thanksgiving holiday rally.

As you will note, the SP 500 failed to strike a higher high in this rally, setting it up for a rollover retracement.

As of the close today I have taken off the longs in volatility and the shorts on the SP index.  I may be premature in this, but if I wanted to be aggressive about this I would be trading the futures on a short term, as was my style for many years.

So tomorrow is the big Non-Farm payrolls report.  I expect that may have some potentially perverse effects, depending on how the market wishes to interpret this data in the light of the Fed's policy change with regard to ZIRP.

I am finding this whole hullabaloo about a 25 basis point increase a little puzzling.  I doubt anyone thinks that this is a routine change and the beginning of an aggressive cycle of rate increases, with the economy still languishing in a zombie like 'recovery.'

And it appears that a zombie recovery is sufficient for the Fed.  This article claims that Yellen says that adding 100k jobs per month would be sufficient.  If she really said this, then things are much worse than I had thought.  I am almost speechless.

But the risks in the market are vastly mispriced, and the overall constitution of the markets are hardly 'robustly,' being more like meringue than a solid foundation with which to support a real economy.

Have a pleasant evening.