Nervous Traders Face Economic Reports, Fed

Nervous anticipation roiled market participants ahead of key news events as the stock market fought for positive movement on Tuesday.

The big news event of the week comes tomorrow when Federal Reserve (Fed) Chairman Jerome Powell speaks.

Traders expect the speech to be a pivotal point as the stock market gears up for a December run.

Traders nervous about economic data, Fed speech

The month-end session on Wednesday is poised to be volatile as the stock market awaits Powell’s speech at 1:30 p.m. Eastern at the Brookings Institution in Washington, D.C.

His speech is aptly titled, “Economic Outlook, Inflation, and the Labor Market.” At this point the next stock market move hinges on his every word.

“The week really appears to kick off, hinge, and pivot on Wednesday forward,” said Neil Yeager, Futures and Training Room Content Provider at Simpler Trading. “Then we get the beginning of what matters this week.”

Neil is also watching the more economic data releases later in the week. These include Personal Consumption Expenditures (PCE) price index on Thursday and U.S. nonfarm payroll employment numbers on Friday.

“This is the real focus for this week,” Neil said.

To this point the stock market has been trading sideways, leaning bullish in the near term with the rally last week. But there has been no real strength to any directional change.

“We’re trading basically in a chop zone,” Neil said. “It doesn’t appear that the ride is over. The holiday move was good, until Monday.”

The market sold off on Monday to end any ongoing rally.

In the market today, the Dow closed at 33,852.53 points – above flat by .01% (adding just 3.07 points on the day). The Nasdaq dropped to 10,983.78 points for a .59% tumble while the S&P 500 stumbled by .16% to 3,957.63 points.

While Neil is still leaning bullish in the short term, he is cautious about what can happen after a rush of economic data this week and what Powell might say.

As this week plays out, Neil is paying particular attention to the E-mini S&P 500 Futures (ES) and the 200-day simple moving average.

Apple losses still high on traders’ watch list

The most heavily weighted name in Nasdaq and S&P 500 is again drawing the attention of Simpler’s traders.

Apple, Inc. (AAPL) has been dropping again.

“This is a consequential name and one to watch,” said David Starr, Vice President of Quantitative Analysis at Simpler Trading. “Apple gapped down significantly Monday. If it doesn’t recover soon, then it could drag down the major indices.”

Simpler’s traders consider Apple a bellwether stock. The high-profile tech company has struggled since January, and it now faces production and supply issues due to ongoing political protests in China where Apple has large manufacturing facilities. AAPL closed at $141.17 today, down 2.11% today, down from a high of $179.70 to start the year.

David isn’t expecting this choppy market to settle down anytime soon.

More bounces higher are possible, but he would be watching for another drop after any bounce.

“While there might be some signs that the market may eventually have some more downside, the path down might have several more false starts in both directions,” David said.

David continues to follow movement in the S&P 500 to get a feel for broader market momentum changes.