Market Hesitates Ahead of Fed Announcement

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Stocks took a breather Tuesday as the Federal Reserve commenced its two-day policy meeting. Volume was the second lowest of the year, behind only Monday’s volume, as traders awaited the Fed’s statement.

Even though the central bank is expected to leave interest rates unchanged, its remarks concerning economic projections and its policy relationships with Europe and Asia will be scrutinized.

Oversupply concerns again pushed crude oil prices lower on Tuesday. WTI fell 2.3% to $36.34 a barrel, and the energy sector dropped 0.2%.

Retail sales fell 0.1% in February month over month, and January’s number was revised to a 0.4% decrease from a previously reported 0.2% increase.

The tech sector was one of the day’s leaders, up 0.4%, helped by a 2% gain in Apple Inc. (AAPL) on promising iPhone demand.

Valeant Pharmaceuticals Intl Inc (VRX), a Canadian drug company, fell over 50% after reducing its guidance and saying it might default on its debt. Drug companies Mallinckrodt PLC (MNK) and Eli Lilly and Co (LLY) were also poor performers, off 14.5% and 3.6%, respectively. The iShares NASDAQ Biotechnology Index (ETF) (IBB) plunged 3.8% for the day.

At Tuesday’s close, the Dow Jones Industrial Average rose 22 points to 17,252, the S&P 500 fell 4 points to 2,016, the Nasdaq lost 22 points at 4,729 and the Russell 2000 was off 18 points at 1,067.

The NYSE Composite’s primary exchange traded about 810 million shares with total volume of 3.6 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 2.8-to-1, and on the Nasdaq, decliners led by 2.9-to-1.

MDY Chart
Click to Enlarge

Chart Key

The chart of the SPDR S&P MidCap 400 ETF (MDY) shows what appears to be a powerful “W” formation. But now, at a crucial time, the formation has formed a small double-top immediately below the 200-day moving average. MDY has broken the bullish support line of the “W,” and for the past two days, has drifted lower. MACD is also fading, but upside volume is greater than downside volume, which is a positive.

Conclusion

Two days don’t make a trend; however, a double-top just below major resistance is enough to make me pause.

The Fed meeting is the obvious reason for the market’s hesitation. Yet, even if the Fed makes an unexpected decision, there are lots of income/value stocks, like the Trade of the Day, which could serve as a warehouse for money until the fog clears.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2016/03/daily-market-outlook-market-hesitates-ahead-of-fed-announcement/.

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