FOMC and Housing #'s this week, among others. I think 1150/115 SPY is possible before next NFP on any positive econ numbers. Beyond that, I don't think 117.50 (swing point from May 12th) is possible unless a good NFP number on Oct 1st.
Cautious if we get anymore euro zone debt headlines, we were moving higher through April along with Greek yields, and then there was the ratings downgrade right near the top, 122.12 SPY, amongst other issues, flash crash, etc. Wouldn't be surprised if Irish debt story continued.
FXWRAP: Euro Slides On Ireland Jitters;Dollar-Yen A Stalemate
NEW YORK, Sept 17 (MNI) - The dollar racked up modest gains vs. the euro and held more or less steady vs. the yen in a Friday session that saw the euro give up overnight gains as fresh jitters emerged about the health of Ireland.
Euro-dollar was changing hands at $1.3045 in afternoon dealings Friday, in the lower end of the day's $1.3020/1.3100 U.S. hours range, the euro beginning the day near that high, only to see early losses.
Overnight, euro-dollar had rallied to $1.3159 as the greenback took on a solidly defensive tone.
Dollar-yen by contrast was trading at Y85.82 in afternoon dealings Friday, the dollar not far removed from its Y85.80 starting level of the day and the pair contained to Y85.65/85.87 throughout the U.S. day.
Afternoon dealings had slipped to the typical pre-weekend trickle but morning dealings, at least in euro-dollar, were much more brisk.
After rallying to $1.3159 in overnight dealings, euro-dollar slipped steadily ahead of the U.S. trading session as Mid-east accounts and short-term speculative players booked quick profits.
But euro losses accelerated as the U.S. session got underway as traders' attention was drawn to published reports that discussed the risks to the Irish economy from the restructuring of Anglo-Irish bank.
That bank, split into a "good bank" and a "bad bank" by the Irish government at the beginning of September, is saddled by huge loan write-offs associated with indiscriminate lending practices during Ireland's real-estate boom.
A recent New York Times report noted that, of $96 billion in loans on the bank's books at the time of a government takeover, only about $15 bn are current, leaving the bank, and the Irish government saddled with losses.
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Fed holds key for stocks to break range
- If the Federal Reserve's view of the economy brightens by just a glimmer next week, it could push the stock market above its four-month trading range.
The S&P 500 closed the week at the higher end of that range, just below 1,130. Some chartists see a break above it as presaging a test of the year's highs.
But options trading suggests some see 1,130 as the market's ceiling and are protecting their portfolios against a decline.
Other investors see the Federal Open Market Committee policy meeting as the turning point that stocks have been searching for to break out of the range with conviction.
"Going up to the close on Tuesday, we could see a little bit of enthusiasm, and perhaps it could be the catalyst that could push us above 1,130 on the S&P," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
In late August, Fed Chairman Ben Bernanke said he would need to see a significant deterioration in economic conditions before easing monetary conditions further. Recent data, including a stronger-than-expected reading on private-sector jobs growth, could prevent further action from the Fed.
If the Fed does move, people "wouldn't interpret it as a bad sign (for the economy) but as the Fed being vigilant in trying to keep this recovery going," Jacobsen said.
Most analysts don't see the Fed moving in that direction immediately, but Jacobsen said any signal will be welcome.
"It could be the impetus that's needed to push people out of bonds and into stocks, finally," he said.
ALL EYES ON TECHNICALS
Even with stocks losing a bit of momentum as some technical indicators suggest, the S&P 500 seems poised to move above 1,130. Some chartists see breaking that level as a harbinger for future gains, with overhead resistance not seen until 1,173 and then at the year's high near 1,220.
Having pierced 1,130 three times in the last three months, the level is garnering attention even from investors who are more focused on fundamentals than technical analysis.
"Whenever economic uncertainty bubbles up, that's when technicals take over in terms of what market participants look for," said Wasif Latif, vice president of equity investments at USAA in San Antonio, Texas.
"A lot of people have been looking at 1,130 and we look at it as a component because other people are acting on it."
For the week, the Dow Jones industrial average .DJI gained 1.4 percent, while the Standard & Poor's 500 Index .SPX advanced 1.5 percent and the Nasdaq Composite Index .IXIC jumped 3.3 percent.
OPTION TRADERS HEDGING BETS
The CBOE Volatility index, or VIX VIX.N, continued to show high volume as investors were bracing for volatility.
"After VIX September options expired on Wednesday, I expected that index options activity to drop," said Randy Frederick, director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.
"But on the day, there was actually a big volume on puts and calls, suggesting that as soon as September contracts expired, they replaced the VIX contracts again for protection."
A large put spread was made on the S&P 500 index .SPX that suggested a substantial move lower in the short term, according to Chris McKhann, analyst at optionMonster.com.
HOUSING DATA ALL WEEK LONG
In terms of economic data, next week's schedule has a daily dose of housing indicators. From the housing market index on Monday to housing starts on Tuesday, followed by existing home sales on Thursday and new home sales on Friday, investors will be able to get a clearer picture of a key sector that must improve before the economic recovery can really kick in.
"It's been so terrible lately that it doesn't have to be strength -- just a sign of life in the housing market could be support for financial markets overall," Jacobsen said.
