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U.S. stock markets kicked off the week on a high note, with all three major indices closing in the green on Monday. However, all eyes remain on the Federal Reserve’s decision regarding interest rates, which could heavily impact the banking sector following a turbulent week that saw bank stocks sell-off and add pressure to the market. The latest sentiment sees the Fed’s monetary policy shifting to accommodate stresses induced by higher interest rates.
Over the weekend, the sector took a major hit with the emergency acquisition of Credit Suisse by rival UBS. The purchase price was less than half Credit Suisse’s market value last Friday, and Swiss regulators had to offer guarantees to bolster the acquisition. As the banking sector has hit with selloffs and scrutiny since the collapse of Silicon Valley Bank on March 10, this week’s FOMC meeting will carry extra weight with investors looking for some reassurance from Fed Chair Jerome Powell.
The Federal Reserve and five other influential central banks announced on Sunday that they would extend U.S. dollar swap line arrangements in a bid to boost liquidity across global funding markets. While the demise of Credit Suisse is more linked to confidence over management than portfolio losses, investors remain focused on the implications of the Fed’s monetary policy. The Fed’s policy-setting committee is scheduled to meet on Tuesday and Wednesday, and traders have already priced in a more accommodative stance from the central bank amid the banking panic. Market pricing suggests a significant chance that the central bank may make no change to interest rates in March.
In addition to the Fed’s decision on interest rates, there are other key reports to monitor this week, including February’s new home sales and March’s flash PMI data. Traders will also be keeping an eye on Wednesday’s post-FOMC speech from Fed Chair Jerome Powell. The $VIX, following a significant spike last week, is trading near the $25 level. Several earnings this week, such as $NKE and $CHWY, as well as liquidity issues in regional and global banks and the Fed’s decision, can influence the next move in the market. We are watching the overhead resistance levels in the SPY, which are presently at $396 and then $402. The $SPY support is at $380 and then $372. We expect the market to trade sideways for the next 2-8 weeks and remain BEARISH ON THE MARKET at this time, encouraging subscribers to hedge their positions. Market commentary readers should maintain clearly defined stop levels for all positions. For reference, the SPY Seasonal Chart is shown below:
Note: The Vector column calculates the change of the Forecasted Average Price for the next trading session relative to the average of actual prices for the last trading session. The column shows the expected average price movement “Up or Down”, in percent. Trend traders should trade along the predicted direction of the Vector. The higher the value of the Vector the higher its momentum.
*Please note: At the time of publication Vlad Karpel does have a position in the featured symbol, slv. Our featured symbol is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, or MonthlyTrader recommendations. If you are interested in receiving Vlad’s picks, please click here.
West Texas Intermediate for Crude Oil delivery (CL.1) is priced at $67.55 per barrel, down 0.13%, at the time of publication.
Looking at USO, a crude oil tracker, our 10-day prediction model shows mixed signals. The fund is trading at $59.79 at the time of publication. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The price for the Gold Continuous Contract (GC00) is up 0.04% at $1983.50 at the time of publication.
Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mixed signals. The gold proxy is trading at $183.84 at the time of publication. Vector signals show +1.07% for today. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The yield on the 10-year Treasury note is up at 3.486% at the time of publication.
The yield on the 30-year Treasury note is up at 3.672% at the time of publication.
Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see mixed signals in our 10-day prediction window. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
The CBOE Volatility Index (^VIX) is $26.52 at the time of publication, and our 10-day prediction window shows mixed signals. Prediction data is uploaded after the market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.
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