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federal reserve rate decision?
federal reserve rate decision - 2015 its time, and everyone is waiting with baited breadth. Raymond James strategist Jeffrey Saut said Tuesday stock investors should get ready for a "rip your face off-type rally."
"You've got massively oversold conditions in the equity markets, the firm's chief investment strategist told "Squawk Box." He said stocks could reach new highs by year-end: "The setup is pretty good for a rally to the upside that's going to surprise a lot of people.
The recent negativity in the market does not deconstruct the bullish case here, Saut added. The sharp decline in junk bonds and oil prices on Friday led to a selloff of nearly 310 points in the Dow Jones industrial average. Stocks bounced higher Monday and in premarket trading Tuesday.
Here is a chart of the SPX, the question is, does this really look like a stock market crashing. Have a look at the chart below and be the judge yourself. You can see how the market is holding quite well, and not entering this CRASH or set up for a crash like many analysts are out there preaching. So far we are holding the lows in NOVEMBER 2015.
"[Stocks] are not as cheap as they were back on [August 21] when I actually said the market is going bottom today. But they are not all that expensive [either]," Saut said.
Saut said he made that summer swoon prediction based on a proprietary market timing model, which also signaled a top in late October. That also turned out to be correct within days. The S&P has fallen about 4 percent since then, as of Monday's close.
But he said Tuesday the model "is calling for a rip your face off rally right here."
Saut believes the stock market can weather an interest rate hike by the Federal Reserve on Wednesday at the conclusion of the central bank's two-day policy meeting.
Fed Chair Janet Yellen is a "gradualist," he said. "I think she does raise rates. I think she then steps back two, three, four or five months to see the impact on the economy, on the financial markets, [and] on the real estate market before she does another rate ratchet."
It’s a big day when it comes to one hot topic of market conversation right now.
Chris Weston, chief market strategist at IG explains: “The notion of a ‘Santa Claus’ rally needs to materialize in today’s U.S. trade. On average, over the last 30 years, the market hit a pivot low on 15 December, before averaging a gain of 1.9% into year-end. If this seasonal pattern is to eventuate, then today traditionally marks the start.”
Of course, on average on Dec. 15, the market wasn’t dealing with the start of a crucial two-day Fed meeting. And some analysts, like one featured in yesterday’s call, say tomorrow is when things could really turn ugly for this market. David Stendahl of Signal Trading Group also takes a look at seasonality on his blog. His chart gives December a mixed outlook:
But hey, Santa’s wish is this market’s command, right? Things are looking pretty festive for stock futures, for now. Oil is doing some lifting, for now. Weston thinks crude is a buy at the moment, and he says if the U.S. oil benchmark breaks above an area of $37.76 to $37.94, then it could climb back to $40 a barrel.
Meanwhile, the Noise! Noise! Noise! around high-yield bonds threatens to drown out the carolers. Several on Twitter yesterday noted how the topic had gone mainstream, even showing up on Gawker.com, where a few readers made high-school jokes about junk. In any case, the strategist behind our call of the day is nonplussed after seeing all of the scary headlines. He says at some point the hysteria is going to die down and opportunity will open up.
Key market gauges
Dow YMZ5, +1.54% and S&P ESZ5, +1.61% futures are making a nice run higher. Crude CLF6, +3.11% was up a fair bit, but has pared some gains as the open nears. Moody’s has slashed its oil forecast for 2016 by 17%.
Gold GCF6, -0.12% is little changed and the dollar DXY, +0.66% is mostly flat. In Asia ADOW, -0.74% the Nikkei NIK, -1.68% had a bumpy session, but Chinese stocks SHCOMP, -0.29% rose. Europe SXXP, +2.87% is powering ahead.
The economy
The Fed meeting kicks off today. Our preview sees plenty of pitfalls ahead for the central bank, which is widely expected to lift rates. While you’re at it, here’s the reading level you need to decipher Fedspeak.
And don’t miss our exclusive interview with Ben Bernanke.
Data showed consumer prices were flat in November, though the core rate rose for a third month, and the Empire state index showed less contraction in December.
The buzz
Lumber Liquidators LL, +29.45% is rocketing higher in premarket on news a famed short seller has backed off.
Unicorn down! The Hudson’s Bay Co., which owns Saks Fifth Avenue, is nearing a deal to buy online luxury retailer Gilt Group for around $250 million, says The Wall Street Journal.
Valeant VRX, +19.61% shares are up in premarket after the company announced a 20-year agreement with Walgreens Boots Alliance WBA, +0.44% Under the deal, Valeant will offer Walgreens a discount on a range of products.
SiriusXM SIRI, +2.38% has signed a 12-year deal with broadcaster Howard Stern.
F5 Networks FFIV, +3.41% could see active trading after it said late Monday its CEO is departing over “matters regarding personal conduct,” and VeriFone PAY, -0.16% may gain after its quarterly results beat views late Monday.
The call
FMD Capital Management is ready to pounce on all of this junk-bond chaos. In a blog post, David Fabian, the fee-only advisory firm’s COO, says he’ll likely be a buyer of high-yield debt next year.
Yes, we did warn that there could be some sort of santa rally!, Today was a nice day up on the SPX, as you can see on the chart below. Realistically, no one knows what comes next on the market, not even us. However our members have got lots of warning!, and it seems this hype in the fed lasts for days and weeks, and months leading up to the actual annoucement, and then when they have the FOMC DAY, all it does is fizzle out and you hear them scream "no no, we can't raise rates, the economy is too bad!" Its the same old thing, over and over again, like one of those record track on repeats. If I was to give you some SMART advice, is that here at the end of 2015, stop listening to people out there saying this market is DOOMED, and is about to crash, you hear it on all the blogs and all the analysts and to be honest the market is holding up very well!!!. The market is holding here well, and that could be a sign for things to come EARLY 2016.
I cover more and more technical analysis ==> HERE in our VIP members section.
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