The market continues to parse and ponder the Fed’s decision last week not to hike rates. That and more from Prab Sagoo, associate director at Nasdaq Advisory Services, in his weekly commentary.
- The Federal Reserve decided to hold rates steady last week, resulting in a continuation of the cheap money status quo for a little while longer. However, the reasons for the delay (international and inflationary concerns) resulted in many wondering whether the weakness in international growth has been fully priced in. (For more on the Fed’s decision, read: Huge letdown from the Fed.)
- The TSX had quickly racked up a 2.4% gain last week coming into the open on Friday, outperforming the 1.5% gains in the Dow and S&P500 (TSX ended with 1.4% gains for the full week). It continues to trade in a range bound manner (13,400-13,900) and remains in correction territory.
- Movements in the price of crude will continue to be a notable influence, though it is experiencing some technical resistance at its 50-day moving average around the $47 mark.
- With the Fed decision firmly behind us, U.S. GDP data on Friday is the most important release on the calendar this week. Another solid reading will give Canadian stocks a boost heading into earnings season.
- CFTC data (for combined S&P500 options and futures) showed that asset managers continued to be bearish coming into the rate decision last week. Data as of Sept. 15 showed that fund managers reduced their long exposure to a YTD low, while increasing their exposure to the short side to a YTD high. Leveraged money raised short exposure to the highest level since mid-March 2015.