Fed-Induced Stock Market Rise Ahead?

I predict a Fed induced stock market rise for Monday

The Fortune Teller Speaks:
I predict a stock market rise for Monday due to hopeful investor sentiment regarding the Fed’s quantitative easing program, plus my expectation of a positive Q3 earnings report from Wall Street giant Apple Computer (AAPL). Merk (MRK) and Seagate Technology (STX) are likely to join the fun as well.

Wall Street Beats and Jives:
Investors appear poised and ready for continued Fed quantitative easing this week, due to the fact that the US economy has yet to satisfy (at least we think) Fed standards. This Wednesday’s FOMC meeting also marks the first time Fed Chairwoman Janet Yellen will be making the calls, and we all know that she is even more dovish than our previous Dr. Ben. Since Wall Streeters love easing, a dovish Yellen plus an anemic economy could very well yield a huge party on Wall Street this week.

This week also brings us an enormous Q3 earnings session, with Wall Street giants Apple (AAPL), Facebook (FB), Starbucks (SBUX) and General Motors (GM) pitching in, among others. Apple will likely start the party today, as their new iPhone 5 C has been an enormous success.

Lastly, Monday brings us Industrial Production and Capacity Utilizations reports, which will likely not interfere one way or another with stock market action today, but Tuesday’s economic reports could certainly make things interesting.

Hindsight is a beach and we’re playing on it:
Last Friday I correctly predicted a higher stock market across the board, due to the “bad news is good” employment picture, good earnings picture, and hopes surrounding the next Fed move. Thankfully I was right. The S&P 500 (SPY) added .44%, the Dow Jones Industrial Average (DIA) added .39%, and the NASDAQ 100 (QQQ) added .37%.

Are stock markets driven by greed, speed and need, OR fear?
At this juncture I would say that stock markets are largely driven by greed and hope that the Fed will continue its free money policy. Only the Fed can turn bad news into good news, and that is likely what will happen this Wednesday. In the meantime, investors are likely be very hopeful, and good earnings reports will only help this sentiment.

Totally calling it:
My five stock market indicators are flashing 100% green for today. All systems go, wish us luck!

Technically Speaking:
From a technical perspective, the S&P 500 (SPY) still has a very robust MACD (5.587) and a near 70 RSI, so the index is still in very positive territory without yet reaching the overbought threshold. The Index does appear to be weakening however, as last week’s gains kept getting smaller and smaller. Keep in mind that we are in totally rare air here, so the bulls will have to get a serious shot of adrenaline to keep the party going:

Silk Road Trading:

Trades from the silk road are also in the green, with the Nikkei 225 (FXY) finishing up by 2.19% and the Hang Seng Index (EWH) finishing up by .52%. European markets are likely to open in the green, judging by the FTSE 100 (EWU) and DAX (EWG) trading well into the green on Friday. The CAC 40 (EWQ) only lost .08%.

A Look Into The (US) Futures:

US futures markets are buying into the hope and greed sentiment as well, as US futures markets are trading well into the green at the time of this writing.

The VIXen of Fear:

Even our fearful VIX Index (VXX) is on the decline, suggesting more equity market strength. The VIX Index (VXX) lost an additional .83% last Friday, and the VIX Index appears to be losing momentum every day, further suggesting that investors are feeling good.

Uncle Sam Is Watching You (and Stocks):

US Treasury Bond (TLT) prices finished flat last week, which may or may not suggest a possible divergence from the crowd. We will know more as the week progresses. Meanwhile, the value of our beloved US Dollar (UUP) continues to decline versus the Euro.

Politics Schmolitiks:

All is quiet on Capital Hill. Let’s keep it that way for a while, considering how much the US Government shutdown slowed down this already slow economy of ours.

Gold and Black Gold Prospects:

Everything I have been reading lately suggests a huge gold (GLD) surge ahead, but do not hold your breath, as spot gold just barely broke its 50 day moving average at $1352.50 per ounce mark. Oil (USO) prices appear to be in a massive correction, so I expect lower oil prices ahead, especially after the oil spot price lost 2.93% last week to close at $97.90 per barrel.

Every Stock Must Die:

I think anyone who ignores Apple (AAPL) today is living under a rock. That being said, anyone who thinks Apple (AAPL) is not losing to its competition also lives under a rock.

Just for Sheets and Giggles:
Fun fact of the day: Last year the top ten corporate CEOs in America took home over $100 million a head, with two taking home over $1 billion, according to MarketWatch.com. Talk about a good year right?

Bottom Line:

I predict a stock market rise for Monday, due to the Fed and earnings reports. May the trade be with you.

This stock market forecast is for educational and informational purposes only. It is not intended to be investment advice nor an investment recommendation. Past performance is no guarantee of or indication of future performance and your performance may vary widely from any that may be indicated in this column. There is risk of loss in all investing and trading activities and you should consult your financial adviser before making any investment decisions.

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