Unexpectedly Intriguing!
October 21, 2019

For a market that got almost every bit of positive news it could have been hoping for in the week before last, the S&P 500 (Index: SPX) didn't carry any momentum into the third week of October 2019.

The proof can be found in the latest update to our spaghetti forecast chart for the index, where we find the S&P 500 skimmed along and just below the top edge of the redzone forecast range we added to the chart just last week.

Alternative Futures - S&P 500 - 2019Q4 - Standard Model with Redzone Forecast with 50/50 Split Between 2019Q4 and 2020Q1 from 8 Oct 2019 to 8 Nov 2019 - Snapshot on 18 Oct 2019

That range assumes that the S&P 500 will track along with investors roughly equally splitting their forward looking focus between the current quarter of 2019-Q4 and the upcoming future quarter of 2020-Q1 in setting today's stock prices. Should the trajectory of the S&P 500 break outside of the redzone range, that would be an indication that investors have focused much more strongly on one of these two quarters.

Much of that dynamic has hinged on investor expectations for what the Federal Reserve will do in upcoming months with interest rates and its new T-bill buying policy. Right now, investors are betting the Fed will announce it will cut the Federal Funds Rate by a quarter point at its meeting at the end of this month, which could be the last cut for a while if the rate change probabilities indicated by the CME Group's FedWatch Tool is any indication:

CME Group FedWatch Tool Probabilities of Federal Funds Rate Changing at Future FOMC Meeting Dates, Snapshot on 18 October 2019

And then, there's that little matter of corporate earnings, which will be rolling out over the next several weeks, as well as other economic news that might alter the focus of investors. Here are the more significant headlines we plucked out of the news stream during the week that was.

Monday, 14 October 2019
Tuesday, 15 October 2019
Wednesday, 16 October 2019
Thursday, 17 October 2019
Friday, 18 October 2019

Barry Ritholtz found five positives and five negatives and no political noise that might affect the market in the past week's economics and market-related news.

If only there were no political noise to have to filter out. Wouldn't that be something!

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