Market Direction Week of October 10, 2016

Market Direction: BULLISH alert issued 6/2/2016

Last Week Review: Stocks fell on the week, despite stronger than expected vehicle sales and manufacturing data. While the job gains were lower than expected, the 156,000 jobs added indicates that the economy continues to grow at a modest pace. In our view, this report did not give investors a catalyst to change their view on the future path of interest rates and a rate hike in December is still likely.

How the market finished last week, the S&P 500 down 0.7%, the Nasdaq down 0.4%, and the Dow down 0.4%.

This Week: With the September employment reports out of the way, a noticeable uptick in volatility futures indicates that the presidential debate on Sunday (10/9) is the next potential market moving catalyst; caution is warranted ahead of Monday’s open. 

Last week’s moderately bearish outlook was on target as the SPX lost about 8 points through Thursday (10/6) and looks as though it may lose a few more on Friday (10/7). Following the debate, the remaining catalysts are earnings season (which unofficially starts on 10/11), the final presidential debate (scheduled for 10/19), the 11/2 FOMC meeting, the 11/8 election and the 12/14 FOMC meeting. 

Economic Calendar: JOLTS (10/12), FOMC Minutes (10/12), Import and Export Prices (10/13), PPI-PD (10/14), Retail Sales (10/14)

Some of the major earnings announcements on deck: FAST, AA, CSX, C, JPM.

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