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Oil Markets in Review: October

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Just about a month ago, analysts were clamoring about the historical prospects of October where indexes typically saw the worst performance of the year. And as if it actually meant anything, reports began to tout the negative outcomes that the first month of the third quarter could produce, especially after the dismal performance of the quarter before. It seems elementary to believe the independence of monthly statistics, but some investors can't help but attribute a kind of seasonality to the apparent pattern. Once again, though, there could have been some sort of contrarian sentiment underneath the bearish rumbles. Some people may forget about that equal and opposite reaction prominent in physics, but like anything with momentum, the adage can apply in financial analysis as well. The concentrated efforts of the bears in the third quarter have diminished and given way to short-term and long-term bulls that traded in the way of the bull market birthed at the end of the financial c…

FOMC Leads A Market Surge

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The results are in. Deliberations have been deliberated, and the Fed Board of Governors can once again retreat behind the economic curtain where the markets will continue to masticate upon their own heavily digested thoughts. Markets showed modest gains on the day as investors patiently waited for a statement to be produced at 2:00 p.m. today. In that memorandum, Chairwoman Janet Yellen surprised listeners with the abdication of the arbitrary prose of meetings before. With the omittance of questioning how long to preserve low rates, the statement hinted at small feelings of urgency as it mentioned that more serious decision-making will occur at the December meeting. On top of rate hikes being delayed until December (possibly), the FOMC decided to leave out key phrases citing worries over the global slowdown and the high probability that the 2% inflation target will not be reached. In fact, the Fed's statement opined that "moderate" growth has been sustained for some time…

Janet Yellen, The Yoga Instructor

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Days before the FOMC's meetings, the spotlight shifts to focus on monetary policy. Traders on the floor and the internet find ways to tune into the world's largest central bank's mind. Where once the Maestro led with few words, now come parched attempts of explaining the Fed's economic plan. In charge of the U.S. monetary positions, Janet Yellen must extricate the country from the particularly sticky situation offered by the world's recent slowdown. A correction in August ruled out interest rate hikes for the rest of the year. All the while, the Fed's Chairwoman must find routes to unwinding her central bank's expansive asset positions instituted on the balance sheet during the 2008 Financial Crisis, a traumatic period during which she served as a Fed Board member. Tons of issues clutter the meeting's atmosphere, towered by the global economic slowdown which continues to echo in statistics coming out almost every day. During this trading session, both t…

Energy Lags on a Neutral Day

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We're at it again. A bullish run from the end of last week appears to have been capped once more with muted movement. Poor performances from tech stocks as well as natural gas firms lead the decliners while advancing stocks made out almost as strong. After a weekend full of central banking activity, the U.S. markets begin to shift their focus to an FOMC meeting scheduled to convene soon even though rate hikes appear very rare. Trading today followed the ECB's hint at more quantitative easing, and, more recently, the People's Bank of China's decision to cut interest rates, reduce reserve requirements, and extirpate a cap on deposits. As worldwide stimulus hits the global economies, markets have responded. Trading sessions in Europe and Asia showed particularly evident jump during the end of last week on Oct 22 and 23. During those days, the Shanghai composite grew about 250 points (7.29%), and the STOXX Europe 600 grew about 20 points (5.33%). The local economic efforts…

Recovering Emerging Markets

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Just like the Fed, the European Central Bank has the venerable reputation of serving as the monetary and financial giant that keeps global economic engines running. Accompanied by an earnings season that has companies constantly meeting or beating their low expected EPS projections, ECB press releases appeared all the more exciting with Mario Draghi in the spotlight. Investors in this report are looking for signals of the continuation of quantitative easing despite some misgivings about its effectiveness. If it does look like QE will be pushed into the end of the year, European securities should see an increase in price. Sure enough, Draghi's comments gave investors the feeling that more stimulus is needed. Even though comments like that could be taken as a contrarian indicator, traders supported gains caused by the preservation of loose monetary conditions. As the Fed and the ECB continue to coordinate their dovish policies, stock markets have responded positively. The Dow Jones …

The Great Gridlock

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It's the beginning of another week full of financial and economic goodies that will make prices toss and turn once more. Market forces constantly being forced into gridlock provide no insight on whether the global economy is gaining speed or continuing its slowdown. Yesterday, major market indices either jumped (or dropped) just a tick above (or below) zero. A historical trader would reference the doom and gloom typical of October's keeping investors on the fence where a bullish rally invites them on one side, and the other a fearful bearish retreat. With supply and demand forces constantly parrying each other, traders trade like they're playing waiting moves as they anticipate guidance from larger economic powers. Most of these people buying and selling stock can't diagnose the global economic condition, so they are left on the backburner as economists try and interpret the complicated atmosphere in which we find ourselves. Even in their analysis, constant contradicti…

Bullish Technicals and Bearish Fundamentals

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In the history of the stock market, the month of October is notoriously known for its bearish overtones. Investors since 1927 seem to want to sell during the first month of the fourth quarter with no apparent pattern to be recognized. Although the bull market since the end of the financial crisis in 2009 has produced Octobers with less capital outflow than those that came before. In fact this year, the first half of the month has boasted capital inflows of almost $1.2 trillion as a result of the recent bullish rally. As a reaction to Fed monetary policy, traders have garnered confidence behind securities that will benefit from the continuation of 0-0.25% interest rates. The averages serving as a litmus test for the trading floor have soared in the first three trading weeks of the new quarter. 

Gains in the NASDAQ, the NYSE index, the Russell 2000, the DJIA. and the S&P 500 have surged about 5% with few days of losses. As a result, most of the ground lost from the August correction…