The U.S. Federal Reserve appears cornered in a "No Win" situation right now. In its FOMC meeting this coming week, the Fed will decide whether or not to raise interest rates. Several voting members have already voiced their hawkish views (translation: it's time to raise rates!), but there are also a few doves still on the Board who think the U.S. economy is just not strong enough for a rate hike here.
Fed Chair Janet Yellen appears ready to raise rates, but recent "data" tend to support waiting until at least the end of this year before pulling the trigger on a 1/4-point hike. And just maybe the Fed Chair has the November Presidential Election in her sub-conscious, and just maybe she's rooting for Hillary Clinton.
For most traders and investors, the prevailing view is that "no rate hike" is bullish for U.S. and global equity prices. While this group could be right, I think that if the Fed stands pat right here a message will be sent that the U.S. economy is weakening and that recession risks are heightened. Any scent of the next potential recession will send stocks lower.
And I think it's safe to say that most traders and investors believe that if the Fed raises interest rates this coming week, the U.S. equity prices will almost certainly retreat.
Damned of They do; Damned if They don't!
Unfortunately for U.S. equity investors, the script has already been written in stone if we look at the latest signals from my computer trading system. An official double sell signal has already been triggered in the weekly chart of the NY Composite Index, and a preliminary monthly chart sell signal is forming for the current month of September in the NY Composite Index. Official Weekly Chart sell signals have also been triggered in the Nasdaq Composite Index and the Russell 2000 Index. Please see all four charts below.
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| Nasdaq Composite Index Weekly Chart with Computer-generated Buy & Sell Signals |
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| Russell 2000 Index Weekly Chart with Computer-generated Buy & Sell Signals |
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| NY Composite Index Weekly Chart with Computer-generated Buy & Sell Signals |
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| NY Composite Index Monthly Chart with Computer-generated Buy & Sell Signals |
