Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are neutral (>30 and <70). Technical Review The December S&P 500 added +0.27% on Friday, settling @ 6874.00. Lower Bollinger band support is 6605. Upper Bollinger band resistance is 6951. Option dealer gamma remains in positive territory as of Friday’s close. When option dealer gamma is positive, option dealers mechanically buy weakness and sell strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. Market Outlook The federal government shutdown is set to bite this weekend as the food stamp program is expected to lose funding on Saturday unless Congress can get its act together. Air traffic controllers and other federal employees are also at risk of not being paid. Our guess is that either enough democrats relent and vote to re-open the government or republicans simply eliminate the filibuster to break the logjam. Will democrats and republicans continue to play games and risk civil unrest? Beyond the shutdown, seasonal tendencies turn more bullish starting next week as more companies emerge from their stock buyback blackout period. So far, earnings are running well ahead of expectations. With 200 S&P 500 companies reporting coming into Friday, S&P 500 earnings are up +12% YoY versus consensus expectations of +8%. With 621 Russell 2000 companies reporting, Russell 2000 earnings growth is +19% YoY.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are neutral (>30 and <70). Technical Review The December S&P 500 dropped -0.97% on Thursday, settling @ 6855.50. Lower Bollinger band support is 6603. Upper Bollinger band resistance is 6943. Option dealer gamma remains in positive territory as of Thursday’s close. When option dealer gamma is positive, option dealers mechanically buy weakness and sell strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. Market Outlook Headlines around the hyped Trump/Xi meeting did not live up to expectations. While there were smiles all around, there was no signing ceremony for a trade agreement. Negative price action from META and MSFT likely weighed on equities on Thursday as well. However, AMZN just reported and shares are up nearly 9% as of this writing. AAPL is trading modestly higher minutes ahead of its earnings. According to the CME’s FedWatch Tool, there is a 72.8% probability that the Fed cuts rates by 25 bps on December 10.

Technical Indicator Summary Daily RSIs for the S&P 500 and Russell 2000 are neutral (>30 and <70). Technical Review The December S&P 500 finished just 3.00 points lower on Wednesday, settling @ 6922.75. Lower Bollinger band support is 6603. Upper Bollinger band resistance is 6934. Option dealer gamma remains in positive territory as of Wednesday’s close. When option dealer gamma is positive, option dealers mechanically buy weakness and sell strength to hedge their exposure. Positive gamma for option dealers increases the odds of LOWER realized volatility and SMALLER percentage moves up or down from one day to the next. Market Outlook As expected, the Fed cut rates by 25 bps. However, Fed Chairman Jay Powell warned markets not to assume another cut at the December FOMC meeting. As of this writing, GOOG shares are trading nearly 5% higher on earnings while MSFT and META are trading lower, -3.6% and -7.0% respectively. On Thursday we get headlines from the Trump/Xi meeting in Asia during US market hours. After Thursday’s closing bell, AAPL and AMZN report Q3 results. According to the CME’s FedWatch Tool, there is a 65.9% probability that the Fed cuts rates by 25 bps on December 10.