Markets Struggle with the Outlook Again

By October 5, 2016Jims Notes

MARKET OUTLOOK: Week of October 5th

The markets continue to struggle with the outlook for growth, earnings and the Fed. The bigger concerns of the day were interest rates and the dollar. The cause… Brexit concerns were back on the table as the sterling fell 1% along with the pound falling to a 31 year low. The valuation pushed the dollar higher on the day posting solid upside move. Where does this activity leave the markets overall? Simply put, in limbo again with the S&P 500 index testing the 2145 level of support again. This is the theme and until there is data to change the outlook investors will default to the news. We will continue to exercise patience and look for the opportunities as they present themselves.

A second day of modest selling for the broad markets continues with energy (XLE), basic materials (XLB), and utilities (XLU) leading the downside. The biggest negative came in utilities dropping below support and continuing the negative trend. Rising interest rates is playing havoc on the interest sensitive sectors and the stronger dollar move is pushing the price of gold below support again and testing the $120.45 level. If the dollar and interest rate continue the downside in precious metals will continue short term.

The threat of the hurricane pushing towards Florida is putting me on the road today and will likely impact the update process the balance of the week depending on how it unfolds. Currently it is heading directly towards my home town and we will see how it unfolds. I will post as I can with the outcome pending on power and time. Hopefully it will not head in the direction projected and blow off to the ocean… fingers crossed.