European Equities: A Quiet Economic Calendar to Test Support Further

Economic Calendar

Thursday, 23rd September

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Friday, 24th September

German Ifo Business Climate Index (Sep)

The Majors

It was a particularly bearish start to the week for the European majors on Monday.

The DAX30 slid by 2.31% to lead the way down, with the CAC40 and the EuroStoxx600 seeing losses of 1.74% and 1.67% respectively.

Economic data on the day was limited to wholesale inflation figures from Germany, which had a muted impact on the majors.

The lack of stats left the markets with little to avert attention away from Wednesday’s FOMC policy decision and projections.

Following Friday’s pullback, dip buyers remained on the sidelines, with FED policy uncertainty testing support for the majors.

Adding to the market angst on the day was the Evergrande crisis, which sparked contagion fears across the global financial markets.

The Stats

It’s a was a quiet day on the Eurozone economic calendar. In August, Germany’s annual wholesale rate of inflation picked up from 10.4% to 12.0%. Economists had forecast an uptick to 11.4%. Month-on-month, Germany’s producer price index rose by 1.5%, following a 1.9% increase in July. Economists had forecast a more modest 0.8% increase.

From the U.S

It was also a particularly quiet day on the economic calendar, with no major stats for the markets to consider.

The Market Movers

For the DAX: It was a bearish day for the auto sector on Monday. Continental tumbled by 5.59% to lead the way down, with Volkswagen sliding by 3.89%. BMW and Daimler weren’t far off, however, with losses of 2.73% and 2.68% respectively.

It was also a bearish day for the banks. Deutsche Bank and Commerzbank slumped by 7.67% and by 7.92% respectively.

From the CAC, it was a bearish day for the banks. Soc Gen and BNP Paribas slid by 5.70% and by 4.46% respectively, with Credit Agricole falling by 3.86%.

It was also a bearish day for the French auto sector. Stellantis NV slid by 4.47%, with Renault falling by 2.19%.

Air France-KLM bucked the trend, rallying by 5.31%, while Airbus SE slipped by 0.97%.

On the VIX Index

It was a 3rd consecutive day in the green for the VIX on Monday.

Following an 11.34% jump on Friday, the VIX surged by 23.55% to end the day at 25.71.

On Monday, the NASDAQ slid by 2.19%, with the Dow and S&P500 ending the day down by 1.78% and by 1.70% respectively.

VIX 210921 Daily Chart

The Day Ahead

It’s another particularly quiet day ahead on the Eurozone’s economic calendar.

There are no major stats to provide the European majors with direction at the start of the week.

From the U.S there are also no major stats to consider later in the session, leaving the markets in limbo ahead of Wednesday’s FOMC.

The Futures

In the futures markets, at the time of writing, the Dow Mini was up by 4 points.

For a look at all of today’s economic events, check out our economic calendar.

How To Visualize A Market Dip

So that got me thinking. If September is usually negative, is there a way to capture the dip? Well, here’s my way of visualizing a market dip.

I’m all about data…especially Big Money data. My favorite indicator is the Big Money Index. It’s my way to tracking what big institutions are likely doing in stocks.

When it falls, expect red markets. When it rises, get the rally hats out:

Chart, line chart

Description automatically generated

Source: www.mapsignals.com

You can see that it’s in an uptrend because summer-selling has been slowing.

Inside of the BMI are the daily buys and sells. Below you can see how buying has been increasing lately. That’s why the BMI is perking higher. I’ve circled the increased buying:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

But since this article is all about a market dip, look how using MAPsignals data can help us visualize a market dip.

Below is the same chart, but I’ve isolated those big red days. Those are days when there’s a lot of selling in stocks. Look:

Chart, histogram

Description automatically generated

Source: www.mapsignals.com

Notice how each of those big red sticks marks the low for the market? That’s the S&P 500 (SPY ETF) I’m using as the market gauge.

But more importantly, look at the 2 week forward performance of SPY after those big sell days. It’s mega juice:

Table

Description automatically generated

Source: MAPsignals, FactSet

That’s how I visualize a market dip with data. But what’s cool is we can see the same similar patterns in ETFs. Below are the daily Big Money buys and sells of ETFs according to MAPsignals. I’ve outlined big red sell days:

Chart, histogram

Description automatically generated

Source: MAPsignals.com

Visually it looks like the stock sells chart. And for good measure, here’s the 2-week return for all of those instances above.

Table

Description automatically generated

Source: MAPsignals, FactSet

Talk about a cool way to see a market dip through the eyes of data.

Here’s the bottom line:

Investors and traders like to talk about buying the dip. And it’s a real phenomenon. Recently, we can see that big sell days for stocks and ETFs have been dips to buy. Will that be the case in the future? Only time will tell.

But, one thing should be apparent. Data can be helpful to a solid trading process.

Disclosure: the author holds no position in SPY, QQQ, DIA, or IWM at the time of publication.

Learn more about the MAPsignals process here: www.mapsignals.com

Disclaimer

https://mapsignals.com/contact/

For a look at all of today’s economic events, check out our economic calendar.

Wall Street Ends Sharply Lower in Broad Sell-Off

The Nasdaq fell to its lowest level in about a month, and Microsoft Corp, Alphabet Inc, Amazon.com Inc, Apple Inc, Facebook Inc and Tesla Inc were among the biggest drags on the index as well as the S&P 500.

All 11 major S&P 500 sectors were lower, with economically sensitive groups like energy down the most.

Investors also were nervous ahead of the Federal Reserve’s policy meeting this week.

The banking sub-index dropped sharply while U.S. Treasury prices rose as worries about the possible default of Evergrande appeared to affect the broader market.

“You kind of knew that when there was something that caught markets off guard, that it was going to lead to probably a bigger sell-off and you didn’t know what the reason would be,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

“I guess it’s the China news but… it’s not altogether surprising given how bullish people were.”

Wednesday will bring the results of the Fed’s policy meeting, where the central bank is expected to lay the groundwork for a tapering, although the consensus is for an actual announcement to be delayed until the November or December meetings.

Unofficially, the Dow Jones Industrial Average fell 620.22 points, or 1.79%, to 33,964.66, the S&P 500 lost 75.28 points, or 1.70%, to 4,357.71 and the Nasdaq Composite dropped 325.95 points, or 2.17%, to 14,718.02.

The S&P 500 is down sharply from its intra-day record high hit on Sept. 2 and is on track to snap a seven-month winning streak.

Strategists at Morgan Stanley said they expected a 10% correction in the S&P 500 as the Fed starts to unwind its monetary support, adding that signs of stalling economic growth could deepen it to 20%.

The CBOE volatility index, known as Wall Street’s fear gauge, rose.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Caroline Valetkevitch in New York; additional reporting by Devik Jain and Sagarika Jaisinghani in Bengaluru and by Noel Randewich in San Francisco; Editing by Sriraj Kalluvila and Lisa Shumaker)

S&P 500 Update: Anticipated Correction Unfolding. Low-4000s on Tap as Expected

In my last update, see here, I showed by using the Elliott Wave Principle (EWP) that the S&P500 (SPX) had most likely completed a significant-top (wave-iii of 3) and would be heading down to the low-4000s on a break below the August low at SPX4368. Nine days later and the index is already trading at SPX4345. Thus the anticipated correction is unfolding, and the low-4000s remain IMHO in tap with an ideal target of SPX4250+/-20. Allow me to explain below.

Figure 1. S&P500 daily chart with detailed EWP count and technical indicators

Today’s break below the August low makes for a lower low

In my last update, I showed that “since the early May low, the SPX has been in an overlapping set of regular interval rallies, lasting about 20 TDs with 3-day corrections, all bottoming around the 18th of each month. Each low and high was a higher low and a higher high: a Bullish pattern. Hence, because the most recent string of down days is already five, a drop below the August low at SPX4368 (orange wave-4 at the green arrow) will confirm a (red) intermediate wave-iv to ideally SPX4030-4235 is underway. I prefer the upper end of the target zone because, in Bull markets, the downside often disappoints, and the upside surprises.

Well, we got the break lower. Thus we have a lower low, and now SPX4030-4235 must be respected as the logical target zone with SPX4250+/-20 as the preferred narrowed-down level to watch. My premium major market members were already ahead of the curve as I identified five waves down last week and anticipated SPX4400-4300 after a bounce (see my tweet here, for example).

The beauty of the EWP is that we know with certainty in an impulse, the 3rd wave up is followed by a 4th wave correction down and then another 5th wave higher. Intermediate wave-iii of major-3 has topped, and wave-iv is now underway, which means wave-v of major-3 is still pending.

For now, I anticipate the SPX to bottom out soon (green minor wave-a in Figure 1 above) at ideally SPX4310-4335, and at a minimum, provide us with a strong bounce (green minor wave-b) before heading lower again. However, there are by then already enough waves in place to call the correction complete: three waves (a,b,c). Besides, I expect wave-v of wave-3 to complete around SPX4800-5000. Thus it is soon time to look for higher price, be it for a bounce (to possibly as high as SPX4600) or a new rally.

Bottom line: the correction I anticipated nine days ago is unfolding. I am now looking for a bottom soon in the SPX4310-4335 region before expecting a significant bounce at a minimum, possibly already a new rally. Namely, ideally, this correction should last longer and reach SPX4250+/-20, but there are soon enough waves in place to consider it complete. And in a Bull market, it is prudent to respect the upside.

For a look at all of today’s economic events, check out our economic calendar.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Weakens Under 14920.25, Strengthens Over 15069.75

December E-mini NASDAQ-100 Index futures are trading lower at the mid-session as global technology shares take a hit across the board. No sector or subsector is safe from heavy selling pressure during today’s session. The catalysts behind the sell-off are worries over the strength of the global market recovery and fear that economic problems in China will spread to other financial markets.

At 17:10 GMT, December E-mini NASDAQ-100 Index futures are trading 14887.50, down 438.50 or -2.86%.

In stock related news, Advanced Micro Devices Inc is the performing the worst, down 3.22%. Adobe Inc is down 2.28%. Align Technology is off by 2.50%, Amazon.com Inc is weaker by 3.53% and Amgen Inc is trading 1.70% lower.

Daily December E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower.  A trade through 14699.00 will change the main trend to down. A move through 15702.25 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 15532.50 will change the minor trend to up.

The short-term range is 14437.00 to 15702.25. The index is currently testing the lower end of its retracement zone at 15069.75 to 14920.25.

The main range is 13450.00 to 15702.25. If the main trend changes to down then look for the selling to possibly extend into its retracement zone at 14576.00 to 14310.25.

The minor range is 14699.00 to 15702.25. Its 50% level at 15200.75 is additional resistance.

Daily Swing Chart Technical Forecast

The direction of the December E-mini NASDAQ-100 Index into the close on Monday is likely to be determined by trader reaction to 14920.25.

Bearish Scenario

A sustained move under 14920.25 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into the main bottom at 14699.

Taking out 14699 will change the main trend to down and could trigger an acceleration into the retracement zone at 14576.00 to 14310.25. Look for buyers on the first test of this area.

Bullish Scenario

A sustained move over 14920.50 will signal the return of buyers. This could create a lowered rally with potential upside targets coming in at 15069.75 and 15200.75.

Overtaking 15200.75 will indicate the buying is getting stronger. Overcoming 15326.00 will put the index in a position to form a potentially bullish closing price reversal bottom.

For a look at all of today’s economic events, check out our economic calendar.

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Weak Under 33826, Strong Over 34132

December E-mini Dow Jones Industrial Average futures are down sharply at the mid-session on Monday as concerns about the pace of a global recovery spurred a sell-off across sectors at the start of a week in which the Federal Reserve will decide on potentially tapering its pandemic-era stimulus.

At 16:42 GMT, December E-mini Dow Jones Industrial Average futures are trading 33739, down 723 or -2.10%.

In stock related news, Dow Component Caterpillar Inc is down 4.86%. Goldman Sachs Group Inc is off by 4.4%, followed by American Express and JPMorgan Chase & Co, which are both lower by 3.47%. Dow Inc is down 3.28%.

Daily December E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The next major downside target is the July 19 main bottom at 33533, followed by the June 21 main bottom at 32835.

A trade through 35383 will change the main trend to up. This is highly unlikely, but due to the prolonged move down in terms of price and time, traders should start watching for a closing price reversal bottom chart pattern. This would change the trend, but if confirmed, it could trigger the start of a 2 to 3 day correction.

The main range is 32835 to 35429. The Dow just crossed over to the weak side of its retracement zone at 33826 to 34132, making it new resistance.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow Jones Industrial Average into the close on Monday is likely to be determined by trader reaction to 33826.

Bearish Scenario

A sustained move under 33826 will indicate the presence of sellers. If this move continues to generate enough downside momentum then look for the selling to extend into 33533. Taking out this level could trigger an acceleration to the downside with 32835 the next likely target.

Bullish Scenario

A sustained move over 33826 will signal the return of buyers. If this move generates enough upside momentum then look for a possible intraday surge into 34132. Overtaking this area could put the Dow in a position to close higher for the session and thus form a closing price reversal bottom.

For a look at all of today’s economic events, check out our economic calendar.

China Evergrande Contagion Concerns Rile Global Markets

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28 on Monday, after earlier plummeting 19% to its weakest level since May 2010.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China’s financial system if its debts are not stabilised.

World shares skidded and the dollar firmed as investors fretted about the spillover risk to the global economy. U.S. stocks were sharply lower, with the S&P 500 down nearly 2%.

A major test comes this week, with Evergrande due to pay $83.5 million in interest relating to its March 2022 bond on Thursday. It has another $47.5 million payment due on Sept. 29 for March 2024 notes.

Both bonds would default if Evergrande fails to settle the interest within 30 days of the scheduled payment dates.

In any default scenario, Evergrande, teetering between a messy meltdown, a managed collapse or the less likely prospect of a bailout by Beijing, will need to restructure the bonds, but analysts expect a low recovery ratio for investors.

Evergrande’s troubles also pressured the broader property sector, with Hong Kong-listed shares of small-sized Chinese developer Sinic Holdings down 87%, wiping $1.5 billion off its market value before trading was suspended.

Evergrande executives are working to salvage its business prospects, including by starting to repay investors in its wealth management products with real estate.

“(Evergrande’s) stock will continue to fall, because there’s not yet a solution that appears to be helping the company to ease its liquidity stress, and there are still so many uncertainties about what the company will do in case of a restructuring,” Kington Lin, managing director of Asset Management Department at Canfield Securities Limited, said.

Lin said Evergrande’s shares could fall to below HK$1 if it is forced to sell most of its assets in a restructuring.

“As of right now, I don’t see any systemic risk for the global economy from the Evergrande situation, but there doesn’t need to be any systemic risk in order for markets to be affected,” David Bahnsen, chief investment officer, The Bahnsen Group, a wealth management firm based in Newport Beach, Calif, said in emailed commentary.

There was some confidence, however, that the situation would be contained.

“Beijing has demonstrated in recent years that it is fully able and willing to step in to stem widespread contagion when major financial/corporate institutions fail,” Alvin Tan, FX Strategist at RBC Capital Markets, said in a research note.

DOLLAR BONDS

Despite mounting worries about the future of what was once the country’s top-selling property developer, analysts, however, have played down comparisons to the 2008 collapse of U.S. investment bank Lehman Brothers.

“First, the dollar bonds will likely get restructured, but most of the debt is in global mutual funds, ETFs, and some Chinese companies and not banks or other important financial institutions,” said LPL Financials’ Ryan Detrick.

“Lehman Brothers was held on nearly all other financial institution’s books,” he said. “Secondly, we think the odds do favor the Chinese communist government will get involved should there be a default.”

Policymakers in China have been telling Evergrande’s major lenders to extend interest payments or rollover loans, but market watchers are largely of the view that a direct bailout from the government is unlikely.

The People’s Bank of China, its central bank, and the nation’s banking watchdog summoned Evergrande’s executives in August in a rare move and warned that it needed to reduce its debt risks and prioritise stability.

Trading of the company’s bonds underscore just how dramatically investor expectations of its prospects have deteriorated this year.

The 8.25% March 2022 dollar bond was traded at 29.156 cents on Monday, yielding over 500%, compared to 13.7% at the start of year. The 9.5% March 2024 bond was at 26.4 cents, yielding over 80%, compared to 14.6% at the start of 2021.

PROPERTY PUNISHED

Goldman Sachs said last week that because Evergrande has dollar bonds issued by both the parent and a special purpose vehicle, recoveries in a potential restructuring could differ between the two sets of bonds, and the process may be prolonged.

Investors, meanwhile, are increasingly worried about the contagion risk, mainly in the debt-laden Chinese property sector, which along with the yuan came under pressure on Monday.

The yuan fell to a three-week low of 6.4831 per dollar in offshore trade.

Hong Kong-listed Sinic, which saw massive selling pressure, has nearly $700 million in offshore debts maturing before June 2022, including $246 million due in a month — a bond which has tumbled to around 89 cents on the dollar.

Sinic has a junk rating from Fitch, which downgraded its outlook to negative on Friday.

Other property stocks such as Sunac, China’s No.4 property developer, tumbled 10.5%, while state-backed Greentown China shed around 6.7%.

Guangzhou R&F Properties Co said on Monday it was raising as much as $2.5 billion by borrowing from major shareholders and selling a subsidiary, highlighting the scramble for cash as distress signals spread in the sector.

For a look at all of today’s economic events, check out our economic calendar.

($1 = 7.7863 Hong Kong dollars)

(Reporting by Clare Jim; additional reporting by Tom Westbrook and Alun John; Writing by Sumeet Chatterjee; Editing by Shri Navaratnam; Mark Potter and Alexander Smith)

S&P 500 Price Forecast – Stock Markets Break Trendline

The S&P 500 has fallen hard during the trading session on Monday, breaking below a major trendline. Furthermore, the market is below the 50 day EMA, something that catches a lot of people’s attention. With this being the case, it is very likely that the 4350 level is an area where we have seen a little bit of support. At this point though, it looks as if the market is trying to break down rather significantly, and if that is going to be the case, then I might be a buyer of puts. I will not get crazy to the short side, because quite frankly it is just so difficult to imagine a scenario where I am comfortable shorting a market that is so highly manipulated. At this point, the market is struggling overall, and I would be cautious about anything the Federal Reserve says or does.

S&P 500 Video 21.09.21

The 4300 level being broken probably opens even more stringent selling, but again, I would not be short of this market, rather I would be a buyer of puts. If we turn around to take out the top of the candlestick for the trading session on Monday, that would be a very bullish sign, and eventually make this a “false breakout”, something that causes a lot of trouble for short sellers.

Regardless, this is a market that I think will eventually find a reason to go higher, if for no other reason than the Federal Reserve stepping in and jawboning the market, or perhaps getting involved in the bond market. Yes, there are a lot of concerns out there when it comes to credit situations in China, but that being said Wall Street always seems to have a narrative that it hangs on to to start buying again.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Is Poised to Open Much Lower, Is This a Dip-buying Opportunity?

The broad stock market index broke below its short-term consolidation on Friday, as the S&P 500 index fell below its recent local lows along 4,450 price level. On September 2 the index reached a new record high of 4,545.85. Since then it has lost almost 120 points. This morning stocks are expected to open much lower following big declines in Asia and Europe after news about Evergrande Real Estate Group crisis in China.

The nearest important support level of the broad stock market index is now at 4,300-4,350 and the next support level is at 4,200. On the other hand, the nearest important resistance level is now at 4,400-4,450, marked by the previous support level. The S&P 500 broke below its over four-month-long upward trend line, as we can see on the daily chart (chart by courtesy of http://stockcharts.com):

Dow Jones Is Leading Lower

Let’s take a look at the Dow Jones Industrial Average chart. The blue-chip index broke below a potential two-month-long rising wedge downward reversal pattern recently. It remained relatively weaker in August – September, as it didn’t reach a new record high like the S&P 500 and the Nasdaq. Today it may sell off to 34,000 level or lower. The next support level is at around 33,250-33,500 and the resistance level is at 34,500, marked by the recent support level, as we can see on the daily chart:

Apple Breaks Below Upward Trend Line

Apple stock weighs around 6.3% in the S&P 500 index, so it is important for the whole broad stock market picture. In early September it reached a new record high of $157.26. And since then it has been declining. So it looked like a bull trap trading action. We can still see negative technical divergences between the price and indicators and a potential topping pattern. The stock is breaking below an over two-month-long upward trend line.

September Last Year – S&P 500 Fell Almost 11%

In 2020, the S&P 500 index reached a local high of 3,588.11 on September 2 and in just three weeks it fell 10.6% to local low of 3,209.45 on September 24. This year, September’s downward correction has started from the new record high of 4,545.85 on September 3, so there is a striking similarity between those two trading actions.

Conclusion

The S&P 500 index broke below its short-term consolidation on Friday and today it will most likely accelerate the downtrend from the early September record high. However, later in the day we may see some short-term/ intraday bottoming trading action.

The market seems overbought, and we may see some more profound downward correction soon. Therefore, we think that the short position is justified from the risk/reward perspective.

Here’s the breakdown:

  • The market is extending its downtrend today, as the S&P 500 index is likely to open much below 4,400 level.
  • Our speculative short position is still justified from the risk/reward perspective.
  • We are expecting a 5% or bigger correction from the record high.

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Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak,
Stock Trading Strategist
Sunshine Profits: Effective Investments through Diligence and Care

* * * * *

The information above represents analyses and opinions of Paul Rejczak & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Paul Rejczak and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Rejczak is not a Registered Securities Advisor. By reading his reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Stocks Retreat Amid Global Sell-Off

All Eyes On China

S&P 500 futures are under significant pressure in premarket trading as traders focus on the potential collapse of China Evergrande Group, which has amassed more than $300 billion in liabilities.

Fears of another financial crisis coming out of Asia pushed global indices towards multi-week lows, but it remains to be seen whether the impact of a potential Evergrande default will have widespread consequences.

Traders are also nervous ahead of the Fed meeting, although Fed Chair Jerome Powell will likely try to calm markets and reiterate his usual dovish message on September 22.

Global Rush To Safety

The yield of 10-year Treasuries has moved away from recent highs and is trying to settle below 1.30% as traders buy U.S. government bonds to protect themselves from the potential correction in riskier markets.

The U.S. dollar is also moving higher due to its safe-haven status. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is trying to settle above the resistance at 93.40. In case this attempt is successful, it will move towards yearly highs near 93.75 which may put more pressure on stocks.

Interestingly, gold is gaining ground despite strong dollar as falling yields and demand for safe-haven assets have provided sufficient support. In this environment, gold mining stocks may rebound from yearly lows.

WTI Oil Tries To Settle Below The $70 Level

WTI oil is currently trying to settle below the support at the psychologically important $70 level as traders fear that Evergrande’s financial problems may have a notable negative impact on China’s economy and cut demand for oil.

Most other commodities are also under pressure, and the market mood is very bearish today. Premarket trading indicates that oil-related stocks will find themselves under huge pressure at the beginning of today’s trading session so traders should be prepared for fast moves.

For a look at all of today’s economic events, check out our economic calendar.

Say Bye-Bye to Major Supports. We May Not See Those Levels for a While

And it happened! The bears were talking about this for a long time and it finally happened; a bearish correction. The price broke the long-term up trendline on the SP500 and is aiming lower. The target for the drop is still far away, so it might be nice to buckle up.

The DAX also dropped like a rock after the breakout of the long-term up trendline and the neckline of the triple top formation. The next target: 14100 points.

Although indices are sliding, gold is not climbing higher. A stronger dollar is definitely not helping.

The GBPUSD came back inside the falling wedge pattern. That’s definitely negative.

The CADJPY is aiming for the 38,2% Fibonacci to test it as a crucial support.

The EURNZD is inside a small sideways trend. A breakout from it, will show us a direction.

The EURJPY has failed to create the inverse head and shoulders pattern and dropped lower.

The USDJPY bounced from the upper line of the triangle and brought us a sell signal with the target being on the lower line of this pattern.

For a look at all of today’s economic events, check out our economic calendar.

German Shares Slump 2%, European Index Hits Two-Month Lows

The pan-European STOXX 600 index was down 1.5% by 07:45 GMT, with mining stocks plunging 3.2% on a slide in commodities prices.

Asian equities also skidded following a torrid session for China Evergrande, the world’s most indebted property developer.

The benchmark European STOXX 600 has now fallen for three straight weeks on worries about slowing global growth, soaring inflation, persistently high COVID-19 cases and the spillover from tighter regulation of Chinese firms.

The U.S. Federal Reserve’s policy meeting is in focus on Tuesday and Wednesday, where the central bank is expected to lay the groundwork for a tapering. Overall, 16 central banks are scheduled to hold meetings this week, including in the UK, Norway, Switzerland and Japan.

“To be sure, the (Fed) is set to default to keeping the QE (quantitative easing) spigots open at this week’s (meeting), given the sizable August jobs disappointment alongside a spotting of soft economic indicators,” said Vishnu Varathan, head of economics and strategy at Mizuho.

“But this merely defers taper. By how much is the question.”

German shares tumbled 1.8% to their lowest since late-July as data showed a bigger-than-expected jump in producer prices last month.

In its biggest ever overhaul, the blue-chip German index began trading on Monday with an increase in the number of constituents to 40 from 30.

Europe’s fear gauge jumped to a four-month high.

China-exposed luxury stocks such as LVMH, Kering, Hermes and Richemont fell between 2.5% and 3.7%, extending sharp losses from last week.

Daimler AG shed 2.3% as a report cited the chief of its truck division, the world’s largest, as saying the unit had seen the supply of crucial chips tighten further in recent weeks.

Lufthansa, on the other hand, reversed early declines to jump 3.1% after saying it expects to raise 2.14 billion euros ($2.51 billion) to pay back part of a state bailout that Germany’s top airline received during the coronavirus crisis.

All major European subindexes were lower in morning trading, with healthcare, utilities, food and beverage and real estate posting the smallest declines. The group is perceived to be a safer bet at a time of heightened economic volatility.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sagarika Jaisinghani in Bengaluru; Editing by Arun Koyyur)

Preview: What to Expect From Nike’s Q1 Earnings on Thursday

The world’s largest athletic footwear and apparel seller Nike is expected to report its fiscal first-quarter earnings of $1.12 per share, which represents year-over-year growth of about 18%, up from $0.95 per share seen in the same period a year ago.

The Beaverton, Oregon-based footwear retailer would post year-over-year revenue growth of over 18% to $12.6 billion. In the last four quarters, on average, Nike has beaten earnings estimates over 55%.

According to ZACKS Research, for fiscal 2022, the company expects to grow revenues in the low-double digits, surpassing $50 billion because of strong customer demand across its segments.

The company expects revenue growth in the first half of fiscal 2022 to be higher than in the second half. The foreign exchange rate is expected to be a tailwind in fiscal 2022, generating 70 basis points of gains, ZACKS Research added.

Nike shares surged over 10% so far this year but the stock closed 0.75% lower at $156.42 on Friday.

Analyst Comments

“Investors are focused on the Vietnam factory closures impact on FY revenue guidance. Our analysis & mgmt. guidance conservatism suggests minimal risk. But high valuation requires beat & raise quarters – stock price pullback possible & we’re buyers on any weakness. Reiterate Overweight; raise price target to $221,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Nike (NKE) trades at the high end of its historical valuation range, & investors expect quarterly beats & guidance raises. Unchanged or lowered FY guidance on temporary, Vietnam-driven headwinds could result in a stock pullback. We would be buyers on any potential weakness.”

Nike Stock Price Forecast

Twenty-five analysts who offered stock ratings for Nike in the last three months forecast the average price in 12 months of $187.26 with a high forecast of $221.00 and a low forecast of $168.00.

The average price target represents a 19.72% change from the last price of $156.42. From those 25 analysts, 21 rated “Buy”, three rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $221 with a high of $410 under a bull scenario and $127 under the worst-case scenario. The firm gave an “Overweight” rating on the footwear and apparel seller’s stock.

Several other analysts have also updated their stock outlook. Cowen and company raised the target price to $196 from $181. Oppenheimer upped the price target to $195 from $150. HSBC lifted the target price to $205 from $162.

“Disruption from COVID-19, supply chain pressure and China continue to escalate. Our contacts across the global supply chain suggest Vietnam could reopen by October. Port congestion and freight headwinds could ease into 2H 2022 and the sector’s 10% valuation correction has improved risk/reward,” noted John Kernan, equity analyst at Cowen.

“We are cutting our FY22 Nike sales estimate by 300bps to 9% growth with a robust recovery into FY23.”

Check out FX Empire’s earnings calendar

Investors Are Waiting For An Updated Fed Reserve’s Policy

Bulls seem to be comfortable ahead of the U.S. Federal Reserve’s upcoming policy meeting next week on Tuesday and Wednesday, September 21-22.

Although the US Federal Reserve has signaled that it will start to taper asset purchases sometime this year, there is still a lot of debate about the timing. With the August Employment Report showing a big slowdown in U.S. job growth, some think the Fed might wait a bit longer before adjusting policy.

Bears vs bulls

Most Wall Street analysts think the central bank will wait until its November meeting to announce details for reducing its asset purchases, which most still anticipate will begin in December. St. Louis Fed President James Bullard recently stressed that, regardless of the disappointing August report, the Fed should start tapering soon.

Bullard as well as most bulls view the slowdown in job growth in August as being temporary, largely driven by the impact of the coronavirus Delta variant on consumer-facing industries that scaled back hiring. As such, the slowdown in job growth and other economic activity should only be temporary.

While job growth may be weak, other economic data still paints a picture of a healthy, ongoing recovery. The latest evidence is Retail Sales for August, which defied expectations with a gain of +0.7% as opposed to the decline most were forecasting and after a nearly -2% drop in July.

Bulls take this as a positive sign that U.S. consumer demand has held up in spite of the summer coronavirus surge as well as increasing inflationary concerns. Keep in mind, a lot of Americans had summer plans complicated or ruined completely for a second year in a row and are now heading into the second holiday season under the cloud of Covid.

You have to imagine there is just a crazy amount of pent-up-demand piled on top of existing pent-up-demand at this point and bulls are still confident that it will translate to even stronger economic growth down the road.

What to watch?

Turning to next week, the housing market takes center stage with the NAHB Housing Market Index on Monday; Building Permits and Housing Starts on Tuesday; Existing Home Sales on Wednesday; and New Home Sales on Friday.

There are also some earnings of interest next week including Adobe, AutoZone, Cracker Barrel, and Stitch Fix on Tuesday; General Mills, Jefferies Financial, and KB Home on Wednesday; and Accenture, Costco, Darden Restaurants, and Nike on Thursday.

Technical analysis

SP500 rallied more than 100% from COVID low without a pullback. So, its not surprising we see increased volatility now. The price is testing daily MA50. It has offered support multiple times till now. So, bulls are hoping the price will build a base in coming sessions. The cycles forecast a rally later in October this year. With that in mind, its good to observe price action for some time before considering swing longs. If daily MA500 fails, we may see a long-waited pullback.

ES ##-## (Daily) 2021_09_20 (1_26_55 AM)

E-mini S&P 500 Index (ES) Futures Technical Analysis – Sellers Could Be Targeting 4328.25 – 4278.50

December E-mini S&P 500 Index futures are trading sharply lower during the pre-market session on Monday. After last week’s sell-off in the benchmark index was mostly fueled by domestic issues, this week began with a steep drop in Hong Kong’s Hang Seng Index, pressuring U.S. futures.

In the U.S. last week, investors had to deal with corporate tax worries, the Delta COVID variant, and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases.

At 04:35 GMT, December E-mini S&P 500 Index futures are trading 4385.50, down 36.25 or -0.82%.

The index also closed under the 50-day moving average on Friday. The move is a sign of weakness and it is likely leading to early profit-taking by a number of money managers.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. Today’s early weakness signaled a resumption of the downtrend. The next target is the main bottom at 4339.75.

A trade through 4539.50 will change the main trend to up. This is highly unlikely but due to the prolonged move down in terms of price and time, the market is currently inside the window of time for a potentially bullish closing price reversal bottom. This won’t change the trend, but it could lead to a 2 to 3 day counter-trend rally.

The minor trend is also down. A trade through 4478.50 will change the minor trend to up. This will also shift momentum to the upside.

The short-term range is 4339.75 to 4539.50. The market is trading on the weak side of its retracement zone at 4416.00 to 4439.75, making it resistance.

The intermediate range is 4214.50 to 4539.50. Its retracement zone at 4377.00 to 4338.75 is the next downside target area.

The main range is 4117.00 to 4539.50. Its retracement zone at 4328.25 to 4278.50 is the best downside target and value zone.

Another key area to watch is the potential support cluster at 4338.75 to 4328.25.

Daily Swing Chart Technical Forecast

The direction of the December E-mini S&P 500 Index early Monday is likely to be determined by trader reaction to 4421.75.

Bearish Scenario

A sustained move under 4421.75 will indicate the presence of sellers. Taking out the Fib level at 4416.00 indicates the selling is getting stronger. The next downside target is the 50% level at 4377.00.

Watch for a technical bounce on the first test of 4377.00. If it fails, we could see a further break into the main bottom at 4339.75, followed by the support cluster at 4338.75 to 4328.25.

Buyers could step in on a move into the value zone at 4328.25 to 4278.50.

Bullish Scenario

A sustained move over 4421.75 will signal the presence of buyers. This will also put the index in a position to form a closing price reversal bottom. The first upside target is 4439.75, followed by the minor top at 4478.50.

For a look at all of today’s economic events, check out our economic calendar.

US Stock Futures: Down Sharply as Investors Climb the ‘Wall of Worry’

The major U.S. stock index futures are trading sharply lower early Monday following last week’s dismal performance. The sell-off looks like investor liquidation with a slew of reasons likely fueling the move. Investors are definitely climbing the wall of worry ahead of the two-day Fed meeting on Tuesday and Wednesday.

However, there are other factors weighing on the trade including China, supply chain issues, debt ceiling negotiations and the infrastructure/tax bill to name a few. Investors are no doubt reacting to the continuing weakness in Hong Kong and shares of China’s Evergrande Group.

At 03:31 GMT, the benchmark S&P 500 Index futures are trading 4387.00, down 34.75 or -0.79%. The blue chip Dow Jones Industrial Average futures are at 34125.00, 337.00 or -0.98% and the technology-based NASDAQ Composite Index futures are trading 15233.25, down 92.75 or -0.61%.

Hong Kong’s Hang Seng Index drops 2% as Evergrande Shares Plunge More than 10%

Hong Kong’s Hang Seng Index led losses among Asia-Pacific markets in Monday’s trade, with shares of embattled Chinese developer China Evergrande Group continuing to drop. The Hang Seng Index dropped 2.18% in the Monday morning trade, as shares of China Evergrande Group plummeted more than 10% Reuters reported.

Last Week’s Weakness on Wall Street Continuing in Early Trade

The U.S. stock market ended the week sharply lower in a broad sell-off on Friday, ending a week buffeted by strong economic data, corporate tax hike worries, the Delta COVID variant, and possible shifts in the U.S. Federal Reserve’s timeline for tapering asset purchases.

All three major U.S. stock indexes lost ground, with the NASDAQ Composite Index’s weighed down as rising U.S Treasury yields pressured market-leading growth stocks. They also posted weekly losses, with the S&P Index suffering its biggest two-week drop since February.

One worry for investors is a potential hike in corporate taxes which could eat into corporate profits. The Democratic House of Representatives is seeking to raise the top tax rate on corporations to 25.5% from the current 21%.

Meanwhile, consumer sentiment steadied in early September, but it remains depressed, according to a University report, as Americans postpone purchases while inflation remains high.

Investors are also closely monitoring inflation, which is likely to be a hot topic of discussion when the Fed meets on September 21-22. Investors will be watching the Fed’s monetary policy statement for changes in language that could signal a shift in the Fed’s tapering timeline.

For a look at all of today’s economic events, check out our economic calendar.

European Equities: A Quiet Economic Calendar Leaves the FED Monetary Policy in Focus

Economic Calendar

Monday, 20th September

German PPI m/m (Aug)

Thursday, 23rd September

Spanish GDP (QoQ) (Q2)

French Manufacturing PMI (Sep) Prelim

French Services PMI (Sep) Prelim

German Manufacturing PMI (Sep) Prelim

German Services PMI (Sep) Prelim

Eurozone Manufacturing PMI (Sep) Prelim

Eurozone Markit Composite PMI (Sep) Prelim

Eurozone Services PMI (Sep) Prelim

Friday, 24th September

German Ifo Business Climate Index (Sep)

The Majors

It was a bearish end to the week for the European majors on Friday.

The DAX30 slid by 1.03% to lead the way down, with the CAC40 and the EuroStoxx600 seeing losses of 0.79% and 0.88% respectively.

Economic data from the Eurozone was on the lighter side, leaving the markets to look ahead to this week’s FOMC meet.

Uncertainty ahead of the FOMC economic projections and monetary policy outlook weighed on the majors.

Later in the session, talk of an increase in U.S corporate tax weighed on the U.S majors, adding further pressure on the European markets.

The Stats

It’s a was a quiet day on the Eurozone economic calendar. Finalized August inflation figures for the Eurozone were in focus early in the European session.

In August, the Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0%, which was in line with prelim figures.

The core annual rate of inflation held steady at 1.6%, which was also in line with prelim figures.

From the U.S

It was also a relatively quiet day on the economic calendar, with consumer sentiment figures in focus.

In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0 versus a forecasted 72.0. The Consumer Expectations climbed from 65.1 to 67.1, according to prelim figures.

The Market Movers

For the DAX: It was a mixed day for the auto sector on Friday. BMW and Volkswagen slid by a 2.48% and by 2.75% respectively, with Daimler falling by 1.42%. Continental bucked the trend following Thursday’s sell-off, however, rising by 1.07%.

It was also a mixed day for the banks. Deutsche Bank fell by 0.23%, while Commerzbank ended the day up by 1.17%.

From the CAC, it was a bearish day for the banks. Soc Gen and BNP Paribas fell by 1.12% and by 1.14% respectively. Credit Agricole led the way down, however, with a 1.77% loss.

It was also a bearish day for the French auto sector. Stellantis NV slid by 3.45%, with Renault falling by 1.20%.

Air France-KLM ended the day up by a further 1.79%, supported by UK travel easing plans, while Airbus SE fell by 1.60%.

On the VIX Index

It was a 2nd consecutive day in the green for the VIX on Friday.

Following a 2.81% gain on Thursday, the VIX jumped by 11.34% to end the day at 20.81.

On Friday, the Dow fell by 0.48%, with the NASDAQ and S&P500 both ending the day down by 0.91% respectively.

VIX 200921 Daily Chart

The Day Ahead

It’s a particularly quiet day ahead on the Eurozone’s economic calendar.

There are no major stats to provide the European majors with direction at the start of the week. German wholesale inflation figures are due out but should have a muted impact on the majors.

With no stats from the U.S to consider later in the session, caution ahead of Wednesday’s FOMC will likely peg the majors back.

The Futures

In the futures markets, at the time of writing, the Dow Mini was down by 101 points.

For a look at all of today’s economic events, check out our economic calendar.

Earnings Week Ahead: Lennar, Autozone, FedEx, Nike and Costco Wholesale in Focus

Earnings Calendar For The Week Of September 20

Monday (September 20)

IN THE SPOTLIGHT: LENNAR

Lennar Corp, a home construction and real estate company, is expected to report earnings per share of $3.27 in the fiscal third quarter, which represents year-over-year growth of over 54% from $2.12 per share seen in the same period a year ago.

The Miami, Florida-based company would post year-over-year revenue growth of nearly 24% to around $7.3 billion. For four quarters in a row, the company has exceeded expectations on earnings per share.

“Shares of Lennar have outperformed the industry so far this year. The company is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn resulted in higher operating leverage. Higher demand for new homes backed by declining mortgage rates and low inventory levels bodes well. Focus on the lighter land strategy to boost free cash flow will bolster the balance sheet and thereby drive returns,” noted Analysts at ZACKS Research.

“Moreover, it has provided strong fiscal Q3 homebuilding gross margin guidance, suggesting 420 basis points (bps) increase at mid-point. Also, it has lifted average selling price and margin expectation for fiscal 2021, indicating 6% and 400bps year-over-year growth. However, higher land, labor and material costs are concerning. This may exert pressure on the company’s upcoming quarters as well.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 20

Ticker Company EPS Forecast
LEN Lennar $3.27
HRB H&R Block -$0.34

 

Tuesday (September 21)

IN THE SPOTLIGHT: AUTOZONE, FEDEX

AUTOZONE: The Memphis, Tennessee-based auto parts retailer is expected to report its fiscal fourth-quarter earnings of $29.71 per share, which represents a year-over-year decline of about 4% from $30.93 per share seen in the same period a year ago.

Autozone (AZO) is our top pick in DIY Auto. We see it as a high-quality retailer with the ability to compound earnings/FCF growth over time. While not immune to a tougher macro backdrop (fewer miles driven), we believe AZO is best positioned through any recession given its leading exposure to the more defensive DIY segment (~80% of sales). In addition, its DIFM growth was accelerating pre-COVID and we think it can gain more share in that segment going forward. In our view, ongoing share gains coupled with solid expense management should allow AZO to overcome headwinds from less driving in the near- to medium-term. These advantages seem priced in currently.”

FEDEX: The Memphis, Tennessee-based multinational delivery services company is expected to report its fiscal first-quarter earnings of $5.00 per share, which represents year-over-year growth of about 3% from $4.87 per share seen in the same period a year ago.

The delivery firm would post revenue growth of about 13% to $21.8 billion. In the last four quarters, on average, FedEx has beaten earnings estimates over 28%.

“August quarter remained strong, although we are seeing some delays in shipments, which we expect management to address,” noted Helane Becker, equity analyst at Cowen.

“We are approaching the peak shipping season and expect to see ~50K new hires to handle what is likely to be record demand. Looking ahead, FedEx (FDX) should finally finish the TNT integration; European operations should show that.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 21

Ticker Company EPS Forecast
AZO AutoZone $29.71
FDX FedEx $4.94
ADBE Adobe Systems $3.01
KGF Kingfisher £12.20
CBRL Cracker Barrel Old Country Store $2.33
NEOG Neogen $0.16

 

Wednesday (September 22)

Ticker Company EPS Forecast
KBH Kb Home $1.61
FUL HB Fuller $0.79
BBBY Bed Bath & Beyond Inc. $0.52
UNFI United Natural Foods $0.80
GIS General Mills $0.89

 

Thursday (September 23)

IN THE SPOTLIGHT: NIKE, COSTCO WHOLESALE

NIKE: The world’s largest athletic footwear and apparel seller is expected to report its fiscal first-quarter earnings of $1.12 per share, which represents year-over-year growth of about 18%, up from $0.95 per share seen in the same period a year ago.

The Beaverton, Oregon-based footwear retailer would post year-over-year revenue growth of over 18% to $12.6 billion.

“Investors are focused on the Vietnam factory closures impact on FY revenue guidance. Our analysis & mgmt guidance conservatism suggests minimal risk. But high valuation requires beat & raise quarters – stock price pullback possible & we’re buyers on any weakness. Reiterate Overweight; raise price target to $221,” noted Kimberly Greenberger, equity analyst at Morgan Stanley.

Nike (NKE) trades at the high end of its historical valuation range, & investors expect quarterly beats & guidance raises. Unchanged or lowered FY guidance on temporary, Vietnam-driven headwinds could result in a stock pullback. We would be buyers on any potential weakness.”

COSTCO WHOLESALE: The world’s fifth-largest retailer is expected to report its fiscal fourth-quarter earnings of $3.56 per share, which represents year-over-year growth of over 1.4% from $3.51 per share seen in the same period a year ago. The Fridley, Minnesota-based medical company would post revenue growth of about 18% to around $63 billion.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE SEPTEMBER 23

Ticker Company EPS Forecast
ACN Accenture $2.18
DRI Darden Restaurants $1.64
NKE Nike $1.12
COST Costco Wholesale $3.56
MTN Vail Resorts -$3.46
PRGS Progress Software $0.82

 

Friday (September 24)

Ticker Company EPS Forecast
CCL Carnival -$1.43
CUK Carnival -$1.45
CCL Carnival -£1.45

 

European Equities: A Week in Review – 17/09/21

The Majors

It was another bearish week for the majors in the week ending 17th September. The CAC40 led the way down, falling by 1.40%, with the DAX30 and the EuroStoxx600 seeing losses of 0.77% and 0.96% respectively.

Economic data for the Eurozone failed to support the majors, in spite of the stats being skewed to the positive.

Mid-week, disappointing economic data from China fueled market concerns over the economic outlook.

Industrial production in China was up by 5.3%, year-on-year, in August versus a forecasted 5.8% increase. In July, production had been up by 6.4%.

Fixed asset investment was up 8.9% versus a forecasted 9.0%. In July, fixed asset investments had been up 10.3%.

While the numbers from China raised yet more red flags, economic data from the U.S impressed, raising policy uncertainty.

Market jitters ahead of next week’s FOMC policy decision and projections delivered the losses for the DAX30 at the end of the week.

The Stats

Economic data wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.

Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the majors.

In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.

Industrial production and trade data were positive, however.

Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.

At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.

From the U.S

In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.

Mid-week, industrial production and NY Empire State manufacturing figures were market positive.

On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.

In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.

Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.

Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.

At the end of the week, consumer sentiment also improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.

The Market Movers

From the DAX, it was a mixed week for the auto sector. Continental slid by 10.98%, with Volkswagen ending the week down by 3.40%. BMW and Daimler ended the week up by 1.44% and by 2.88% respectively, however.

It was also a mixed week for the banking sector. Deutsche Bank rallied by 2.64%, while Commerzbank fell by 0.18%.

From the CAC, it was a mixed week for the banks. BNP Paribas rose by 1.36% to buck the trend. Credit Agricole and Soc Gen fell by 2.59% and by 1.48% respectively.

It was also a mixed week for the French auto sector. Stellantis NV rose by 0.63%, while Renault slid by 1.71%.

Air France-KLM found much needed support, rising by 2.29%, while Airbus ended the week with a 1.15% loss.

On the VIX Index

It was back into the red for the VIX in the week ending 17th September, ending a run of 2 consecutive weekly gains.

Following a 27.67% jump from the previous week, the VIX slipped by 0.67% to end the week at 20.81.

2-days in the red from 5 sessions, which included 6.58% fall on Wednesday delivered the downside. An 11.34% rise on Friday limited the downside from the week, however.

For the week, the NASDAQ fell by 0.47%, with the Dow and the S&P500 ending the week down by 0.07% and by 0.57% respectively.

VIX 180921 Weekly Chart

The Week Ahead

It’s a relatively busy week ahead on the economic calendar.

Key stats include prelim September private sector PMIs for France, Germany, and the Eurozone.

At the end of the week, German IFO business climate figures will also influence.

From the U.S, it’s a quieter but influential week ahead.

On the economic data front, prelim private sector PMIs for September and weekly jobless claims will influence.

The main event of the week, however, is the FED monetary policy decision and projections.

With the FED expected to stand pat on policy, expect the FED’s economic projections and policy outlook to be key.

Wall Street Closes Rollercoaster Week Sharply Lower

All three major U.S. stock indexes lost ground, with the Nasdaq Composite Index’s weighed down as rising U.S. Treasury yields pressured market-leading growth stocks.

They also posted weekly losses, with the S&P index suffering its biggest two-week drop since February.

“The market is struggling with prospects for tighter fiscal policy due to tax increases, and tighter monetary policy due to Fed tapering,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

“Equity markets are also a little softer due to today’s weak Consumer Sentiment data,” Carter added. “It’s triggering concerns that the Delta variant could slow economic growth.”

A potential hike in corporate taxes could eat into earnings also weigh on markets, with leading Democrats seeking to raise the top tax rate on corporations to 26.5% from the current 21%.

While consumer sentiment steadied this month it remains depressed, according to a University of Michigan report, as Americans postpone purchases while inflation remains high.

Inflation is likely to be a major issue next week, when the Federal Open Markets Committee holds its two-day monetary policy meeting. Market participants will be watching closely for changes in nuance which could signal a shift in the Fed’s tapering timeline.

“It has been a week of mixed economic data and we are focused clearly on what will come out of the Fed meeting next week,” said Bill Northey, senior investment director at U.S. Bank Wealth Management in Helena, Montana.

The Dow Jones Industrial Average fell 166.44 points, or 0.48%, to 34,584.88; the S&P 500 lost 40.76 points, or 0.91%, at 4,432.99; and the Nasdaq Composite dropped 137.96 points, or 0.91%, to 15,043.97.

The S&P 500 ended below its 50-day moving average, which in recent history has proven a rather sturdy support level.

Of the 11 major sectors in the S&P 500, all but healthcare ended in the red, with materials and utilities suffering the biggest percentage drops.

COVID vaccine manufacturers Pfizer Inc and Moderna Inc dropped 1.3% and 2.4%, respectively, as U.S. health officials moved the debate over booster doses to a panel of independent experts.

U.S. Steel Corp shed 8.0% after it unveiled a $3 billion mini-mill investment plan.

Robinhood Markets Inc rose 1.0% after Cathie Wood’s ARK Invest bought $14.7 million worth of shares in the trading platform.

Volume and volatility spiked toward the end of the session due to “triple witching,” which is the quarterly, simultaneous expiration of stock options, stock index futures, and stock index options contracts.

Volume on U.S. exchanges was 15.51 billion shares, compared with the 9.70 billion average over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.97-to-1 ratio; on Nasdaq, a 1.00-to-1 ratio favored advancers.

The S&P 500 posted seven new 52-week highs and two new lows; the Nasdaq Composite recorded 67 new highs and 82 new lows.

(Reporting by Stephen Culp; Additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; Editing by Richard Chang)