Bank of America technician Stephen Suttmeier explains why weak seasonals and tactical complacency could mean trouble for stocks heading into next month. » Read More
Investors are not fully prepared for a September rate hike, and they're too complacent about the chances for another one in December, according to money manager Jeroen Blokland.
"The U.S. economy has continued to grow showing decent numbers," said Blokland, senior portfolio manager at Robeco, on Tuesday's "Futures Now. "I think the Fed just has to get off the 0.5 percent at some point and this is probably a good time to do so."
Blokland, who has just under $300 billion in assets under management, believes the Fed has already missed a couple of vital opportunities for a rate hike.
"The Fed should raise rates sooner than later," he contended. "Jobs have grown at an above-average pace since December. Wages, income, spending are all growing at a decent pace. Consumer prices have risen as well."
If Friday's August employment report is strong, it'll give the central bank more ammunition to boost rates a quarter point to 0.75 percent.
"We have to take into account that these interest rates are still extremely low and that the Fed is looking for a gradual path to normalization," he said.
On Friday, Fed Chair Janet Yellen said the case for an interest rate rise "has been strengthened" by recent data, though she did not lay out a timetable for future hikes.
And as for stocks?
"The markets look a bit frothy. So, I think this could be an important hurdle for stocks to rise further from here," Blokland said.
Call it the curious case of gold and bonds.
Typically, the yellow metal and U.S. Treasurys move in opposition as investors shift from one to the other in search of a safe haven amid changing economic conditions.
However, Dennis Gartman, editor and publisher of The Gartman Letter, highlighted some very unusual activity that's been underway in recent months.
"Having been at this for 40 years, I always look for anomalies," explained Gartman on CNBC's "Futures Now" on Thursday. "It's very strange to me that, since June, as went gold so went the bond market."
"It doesn't make any sense to me," said Gartman. "If you go back over the course of the past many years, they move in contravention."
It hasn't been a great few months for oil, but one technical analyst believes crude could be headed for $70 per barrel in the near future.
Despite bearish outlooks like from Goldman Sachs, which predicted this week that oil will be trapped in the $45 to $50 range, Orips Research chief market technician Zev Spiro sees oil surging again. This time, it could rally about 50 percent above current levels.
According to Spiro, oil's impending rally has been building from a technical perspective since last year. Looking at a weekly chart of crude, Spiro points out that a "head and shoulders bottoming pattern" began in July of last year. An inverse head and shoulders pattern like the one on Spiro's weekly chart is seen as an indication that an uptrend could be on its way.
There's one more thing Spiro needs to see before he's sure.
"This large complex bottoming pattern could trigger a confirmed move above the horizontal neckline in the $50-$51 area," he said Thursday on CNBC's "Futures Now." "[This] would signal a primary uptrend with a minimum expected price objective in the $73 to $76 area."
But the surge may only come after more losses for oil in the short term. A daily chart of oil shows Spiro that a so-called "bearish evening star pattern" formed in August, which could spell more movement to the downside in the next few weeks.
"The pattern indicated minor resistance at the height of $48.75 and a possible pullback in the near term," said Spiro.
Nevertheless, Spiro maintains a bullish outlook for oil based on long-term patterns that he sees developing.
"Despite the potential for lower prices in the near term, the overall picture is bullish as prices are forming the right side of this large bottoming pattern," he explained.
Based on what he sees in the charts, Spiro argues that investors have two potential buying opportunities in oil. The first would be when oil pulls back to its current support around $43.50, and the second when oil breaks above Spiro's neckline area of $50 to 51.
On Friday morning, oil traded around $47.
If you're waiting for Fed Chair Janet Yellen to give some guidance as to when she will hike interest rates, don't hold your breath — says one Wall Street firm.
"The market is hoping that she's going to give us clarification, not only on long-term monetary policies, but also some clarity on current monetary policy," explained JPMorgan's Priscilla Hancock on CNBC's "Futures Now" on Tuesday. "[However], it's likely that the market is going to be disappointed. [It] would be wise not to expect too much from Janet going into Friday."
Ahead of the upcoming Jackson Hole conference where Fed Chair Janet Yellen is scheduled to speak, investors are indeed pining for some concrete insight as to what the Fed's next move will be. However, Hancock firmly believes that Yellen's approach will remain extremely cautious and that it will continue to focus on a variety of factors including risk management and global monetary conditions.
This notion does come amid some recent hawkish rhetoric from San Francisco Fed President John Williams and New York Fed President William Dudley, but Hancock doesn't not envision a rate hike in the fall.
"We're still calling for a December rate hike," explained Hancock. "It seems to me that the GDP numbers and inflation are moving us down the path to where the Fed is going to look to a December hike. That is our base case."
In the second quarter of 2016, U.S. GDP increased at a yearly rate of 1.2 percent as inflation has steadily declined through the summer months.
Going forward, JPMorgan anticipates an extremely tight trading range for yields to continue, regardless of positive economic data, as the market remains cautious alongside Yellen.
"It's hard for the curve to flatten significantly from here," said Hancock. "Likewise, it's hard for the curve to steepen." Hancock reasons that this is because central banks are buying a significant amount of bonds every month, which limits the amount of movement global investors from Europe and Japan can cause through the trading of U.S. Treasurys.
In the last month, the U.S. 10-year has lost just 1 percent while the two- and five-year notes remain unchanged.
"Everybody is searching for yield," concluded Hancock. "Now we have a situation where the technicals are 'uber' strong and the demand is extraordinary. Any tiny tick up in rates is just met by demand. That's keeping yields down and it's keeping spreads tight."
As equities continue to defy history and edge higher in August, a top Wall Street bank is keeping an eye on one key bearish indicator.
"We've had a couple of weekly candle patterns, which suggest that there's some indecision about the market," said Chief Equity Technical Strategist for Bank of America Merrill Lynch Stephen Suttmeier on CNBC's "Futures Now" on Thursday.
Suttmeier emphasized that while his team remains bullish on the S&P 500, traders should consider the candles in order to draw conclusions about the market's next move during the second half of August. Candlesticks show movement over a given period of time and the shape demonstrates highs and lows as well as opening and closing prices.
Suttmeier illustrated that in recent weeks, the technicals for the S&P 500 appear to be bearish and that the recent occurrence of two types of candles have been troubling. During the last week of July and during the second week of August, a "doji" occurred, which is when the open and close remain at comparable levels and ultimately represent a sign of indecision on Wall Street.
The other recent bearish candle was a "hanging man," which occurred during the first week of August. This type of candle is considered to be a risky pattern and shows an increase for the likelihood of an interim top. In conjunction, these candles could represent some near-term downside, but Suttmeier remains optimistic that a drop could set-up a base for gains in the long-term.
"We do think that the S&P could settle and find support somewhere around 2,147," noted Suttmeier. "However, the breakout should remain intact and we do see much further upside."
Year to date, the S&P 500 is up 7 percent and has gained 19 percent since the February lows. The index was relatively flat this past week and ended down less than 1 percent.
Ultimately, Suttmeier explained that, despite recent bearish signs in the market, the reasons for optimism remain strong.
"I think we've got a lot of things going for us: breadth, volume internals and the credit markets are firm," said Suttmeier while discussing why the S&P 500 has remained in a cyclical bull market since March 2009, the second longest stretch in history.
Investors may be thrilled about the current bull market, but one market watcher believes that paying attention to volume is a better way to maximize their profit.
Paul Hickey, co-founder of Bespoke Investment Group, took a look at the performance of the S&P 500 Index over the years as it compared to volume. What he found was a huge difference in returns on days with below-average market volume, and on days when it was above-average.
"The cumulative return of the S&P 500 during this bull market on below average volume days [increased] 823 percent," said Hickey Thursday on CNBC's "Futures Now." "Cumulative return of the S&P 500 on above average volume days [saw] a decline of 65 percent."
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