Stock Market Today: December 17th - 21st, 2018

Whelp, this is now the largest monthly decline for the SPX (should the month close out here) since post-Flash Crash in May 2010.



That doesn't take us back that long, however, for the month of December, which is notoriously known to be a strong month with Santa Rallies, etc. this is now the worst December for the SPX (if again the month were to close here) since, get this, 1931

The official SCR (Santa Claus Rally) doesn't actually begin until Dec. 24th though. As it's gauged by the final 5 trading days of the current year, and the first 2 trading days of the new year.

So as bad as this month has been, we could certainly still get the SCR.

But, will it be enough to bring the SPX back to at least around UNCH'd for the year?

 

Here's a quick look at the S&P sectors % changes YTD as of today:



and here are the sectors % above their 50ma's



SPX made new YTD lows yesterday, but the % of stocks above the 50dma not quite at new lows. Perhaps a slight positive divergence there.

 

Ding dong! And that's a wrap to yet another crazy and wild day at the 'ole stock market that has us closing at about UNCH'd when all was said and done. FED meeting on deck for tomorrow should be interesting.

 

Good Wednesday morning to all. Welcome to Fed Decision Day!

Here is the pre-market thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone a great trading day ahead!

 

Fed Meeting Preview

The Federal Reserve (Fed) kicked off its final meeting of 2018 today. Financial markets, however, have already turned the calendar on interest-rate predictions.

Fed funds futures’ implied probability for a rate hike at this week’s meeting has hovered around 70–80% for most of this quarter. As shown in the LPL Chart of the Day, investors’ rate hike expectations for next year have dropped significantly since the Fed’s last meeting, reflecting their nervousness around the Fed’s exit from accommodative monetary conditions in a complex environment.



“Markets will continue to look closely for hints on how high the Fed may push rates next year,” said LPL Research Chief Investment Strategist John Lynch. “Although a complex economy often creates unknown challenges, we remain confident that the Fed’s current flexible approach may lower the likelihood of a policy mistake.”

Investors have had to digest several headwinds in the latter half of this year, many of which have rattled markets recently. Because of this, we expect Fed Chair Jerome Powell’s post-announcement press conference to garner more attention than the rate decision itself (barring a surprise). Policymakers’ comments on the “neutral rate,” the point where monetary policy is neither accommodative nor restrictive for the economy, have fueled stark rallies and sell-offs in U.S. stocks recently, and we expect the markets’ fascination around the neutral rate to continue.

Still, we have faith in the Fed’s pragmatic evaluation of risks, especially in the current environment. As mentioned in our 2019 Outlook: FUNDAMENTAL: How to Focus on What Really Matters in the Markets, we expect the terminal fed funds rate to peak at 3% this cycle, implying three more hikes from the current fed funds rate, as moderate growth and manageable inflationary pressures continue into next year. Solid economic growth and a tight labor market with manageable inflation have been a testament to the Fed’s ability to balance price stability and maximum sustainable employment. We encourage investors to focus on the Fed’s pragmatic, balanced approach, which gives us confidence in its ability to execute policy effectively as rates converge on neutral.

 

Just a reminder that we have the FOMC announcement coming out in less than 4 hours from now!

I setup a FED poll for anyone who hasn't gotten the chance to vote yet-

• Fed Poll: Will the FED raise rates on the final FOMC Meeting of 2018? <-- click there to vote!

Will be interesting to see what we get @ 2pm eastern.