Market Trend Commentary & Analysis September 21, 2019

The market trend last week was abundant with unusual developments, though, movement in the stock market was limited. In many references was due to Friday's quarterly quadruple witching (stocks and futures) options expiration. 

Trading volume was considerably above average, with more than two and half billion shares changed hands at the New York Stock Exchange trading floor, and that was the difference-maker for the many bulls and bears at least in a indices market trend.

DJI Average underperformed, by declining 1%, the broader S&P 500 index was down 0.5%, while the Nasdaq Composite surrendered 0.7%. The small-cap Russell 2000 index finished down with 1.2% for the week.

The crude oil was in the center of trading at the beginning of the week, after Saudi Arabia, two refineries were struck on September 14. Initial statements hinted that the attack impacted about 5% of total global crude oil production. 

Though Saudi Arabia was able to reestablish a portion of the disabled production in short order, the crude oil mounted more than 15% at the September 15 open, partially due to a concern that a response to the assault could ignite a major regional conflict. 

However, those worries subsided as the trading week went on while crude oil backed off its Sunday, September 15 high, finishing with an increase of $3.21 or 5.9% for the week.

Then on Tuesday, attention turned to the overnight funding market after the repo by Fed rate vaulted for the second continuous trading day, symbolizing liquidity stress amongst primary dealers. The circumstances urged N.Y. Fed to administer repo action on Tuesday thru Friday.

On Wednesday, the September FOMC (Federal Open Market Committee) announcement designated a 25 basis points interest rate cut while IOER (Interest On Excess Reserves)  was reduced by 30 basis points to 1.8% to stimulate more lending plot in the overnight market trend. 

The Federal Reserve dot plot revealed that seven out of seventeen Fed directors demanded that another interest rate cut should be made this year, however, the median forecast does not aim to any more additional interest rate cuts in 2019 and 2020.

Bottom line, presently there is a possibility that this might be the very last interest rate cut of 2019 as the medium-course adjustment process lasts though could be concluded. 

Hence call this a hawkish interest rate cut. The market was, of course, very much disappointed with the limit on the volume of candy they will get still more interest rate cuts find an ever much slowing economy and that is not something to cheer about.

Nevertheless, there was some small movement on the trade front by the conclusion of the trading week, as Trump's administration allowed short term tariff exclusions for some imported Chinese goods.

The ruling was made following trade officials from the United States, and China carried out low-level discussions leading to the next round of tariff negotiations scheduled for next month; however, the positive vibes were very short-lived. 

The Chinese team canceled their U.S. visit abruptly. The negotiations group had initially planned to tour the farms in both  Nebraska and Montana as an act of good faith. 

Presently it is unknown whether China will buy more U.S. agriculture products as initially declared. The Chinese negotiation delegation has yet to explain their reasoning behind the sudden termination of their tour.