The markets closed another week of relatively extreme volatility, strong USD and JPY trends and central banker intervention. Those trends are expected to continue through next week but there are some potential disruptors that you should be aware of.
- Many of the majors have hit significant profit targets following the weak USD pullback and subsequent correction in September. In the video I will illustrate a few of these. Although this is purely technical evidence it is very common to get some consolidation at these target levels and considering the dramatic trend we have experienced, a pause would not be a surprise.
- TIC data is due late in the week for the US. TIC data is a measure of international money flowing into and out of US equities, debt and other investments. Although the data lags, if it disagrees with the current trend (by showing net decline in US investments) we could see a mild disruption to the trend. Conversely however, if the data shows that international money is flowing into US assets the current trend could really benefit.
- Next week is a big one for corporate earnings. These quarterly releases tend to cluster near each other and 3rd quarter's announcements are now due. Investor pessimism is about as low as it has ever been based on index prices but there are already some early signs that small investors and speculators are starting to go bargain hunting. A rally in equities next week may be nothing more than a dead cat bounce but it could interrupt the trend in the JPY for a time.
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