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A Rate-Hike In December?

Stronger than expected economic growth gives the U.S. Fed a chance for a December rate hike when it meets next week. Again, what is good news for the economy is bad news for the market.

On one hand investors cheered the news that the economy grew at the fastest pace in two years, and on the other hand they have a tough time getting used to the idea that this will probably trigger a rate-hike in December. This is why the market went on a hectic trading binge last Friday.

At first, the DOW was up 75 points, then down 74 points only to end Friday's trade down just 10 points. Some traders blame these sharp spikes on trading platforms that analyzes news head-lines for positive or negative implications and trigger trades accordingly.

But for now, the market appears to be stalled and consolidating within a tight trading range and probably will stay that way until after the U.S. election.

Check this daily DOW chart [INDU] and note that this index continues to project a bearish Moving-Average lines configuration [red line below the green line] as it has since early September. Also note that the RSI strength indicator and MACD momentum bars remain stuck in their respective bearish territories with no momentum to the up or downside.

The same configurations applys to the [SPX] large-cap index.

The economic sensitive transportation index [TRAN] appears to be in pretty good shape. Although this index has been in a downdraft lately, the MA lines configuration remains strongly bullish with this wide gap between the red line above the green line.

But with the MACD momentum bars stuck south of the demarcation line there's no momentum, up or down. At the same time the RSI strength indicator seems also stuck on its neutral line.

What all of this implies is that for now there is no up or down in this game, just a continued sideways move to nowhere.

The tech-heavy NASDAQ [NDX] remains well supported by a bullish MA lines configuration [red line above the green] and that's what's keeping this index up there.

But with the RSI strength indicator and MACD momentum bars sliding into bearish territories, the best the market can do for now is to keep consolidating.

The large-caps [RUA] mid-caps [MID] and small-caps [RUT] sectors all show a similar bearish configuration. The red MA lines below the greens, while the RSI and MACD indicators are slipping deeper into bearish territories suggests that the market as a whole is getting to be considerably more bearish.

With the red line above the green, the energy sector [XLE] remains bullish. But with the RSI strength indicator and MACD momentum bars in their respective bearish territories, any rally in this sector will be shortlived.

The financial sector of the market [XLF] appears to be quite healthy. The MA lines configuration is bullish again with the red line above the green. Also, both the RSI strength indicator and MACD momentum bars are back in their respective bullish territories.

The health-care sector [XLV] is a basket case. The MA lines configuration is strongly bearish with the red line below the green, and both the RSI strength and MACD momentum indicators are deep in their respective bearish territories.

With the MACD momentum bars on top of the demarcation line,[GOLD] still has some upside momentum left. But with the MA lines configuration extremely bearish [wide gap between the red line below the green] any upside momentum for gold will soon stall.

That the RSI strength indicator keeps sitting in its bearish territory doesn't help to advance the yellow metal either.

Although the price of oil [WTIC] keeps topping out, for as long the MA lines configuration stays bullish with this wide gap between the red line above the green, oil will continue to consolidate.

But with the MACD momentum bars in bearish territory below the demarcation line, there is no upside momentum for the price of oil and why the RSI strength indicator is sitting at dead neutral.

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Financialls, Semis, Materials, Technology;

Leveraged Bull ETFs:

DOW 2x (NYSEARCA:DDM), Small-Caps 3x (NYSEARCA:TNA), Materials 2x (NYSEARCA:UYM), Mid-Caps 3x (NYSEARCA:MIDU), Technology 3x (NYSEARCA:TECL), Energy 3x (NYSEARCA:ERX);

Non-Leveraged Long ETFs:


Leveraged Bear ETFs:

S&P500, 2X (NYSEARCA:SDS), Financials 3x (NYSEARCA:FAZ), DOW 2x (NYSE:DXD), Gold 2x (NYSEARCA:GLL), Emerging Markets 2x (NYSEARCA:EDZ), Energy 3x (NYSEARCA:ERY);

Non-Leveraged Short ETFs:


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