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NEW YORK (Reuters) – Wall Street navigated through three major landmines last week -- the elections, the U.S. Federal Reserve meeting and jobs report -- with barely a scratch. Now what?

With earnings season winding down and a light economic calendar this week, the market will be left to its own devices to sort out its direction.

A rise of more than 16 percent in the S&P 500 (.SPX) since the start of September had many investors expecting a pullback after the trio of big events. But it appears to have emboldened them instead.

The CBOE Volatility Index, a measure of market anxiety, has slipped below 19 and the late-week action suggests a market getting ready for more gains -- not a sell-off.

"Some of the alternatives to stocks (bonds, cash, etc.) now look much less attractive, which should push money in the direction of stocks," said Bill Luby, a private investor in San Francisco, who writes the VIX and More blog.

This will result in "reducing some of the downside risk for owning stocks, and also putting downward pressure on the VIX."

With the Fed supporting markets through quantitative easing, rates could remain low for quite some time. That, in turn, should help stimulate borrowing and make riskier assets more attractive. It could take data of a momentous nature -- something that suggests the economy is not responding to the Fed's plan to buy $600 billion in Treasuries -- to cause anything more than a minor slip-up in the market.

"What the Fed is doing is a consistent increase in money supply. Consistency will be much more important to the psyche of investors than big spikes," said Edward Hemmelgarn, chief investment officer of Shaker Investments in Cleveland.

That feeling permeated the market even before Friday's jobs data, which showed the fastest payroll growth in the private sector since April. It is difficult to see the market fighting Fed-led stimulus, strong corporate results and labor force improvements.

DIAL 'M' FOR MOMENTUM

The Fed's intentions make the search for yield even more intense, which could bolster financial stocks in coming days.

Financials climbed solidly higher on Friday, with the KBW Bank index (.BKX) up 2.2 percent, on talk the Fed may allow stronger banks to increase dividends. They could continue to climb as they have underperformed the rally since September.

Call volume in the Financial Select Sector ETF SPDR fund (XLF.P) surged, as option traders exchanged about 618,000 contracts in the XLF on Friday, led by the trading of 480,000 call options. The overall options volume was three times greater than its average daily turnover, according to options analytics firm Trade Alert.

A correction might still occur, though. A number of indicators suggest the market is in position to consolidate.

The 14-day relative strength index is at 88.5. A reading above 70 usually indicates an overbought condition. However, some analysts say the indicator for an overbought market expands in a bull market. So this level may not necessarily be a bearish indicator.

Bespoke Investment Group noted the rally has put the major indexes and sectors into "extreme overbought territory" in the near-term, with the S&P 500 and six sectors at or near two standard deviations above their 50-day moving averages.

"Some sort of correction may be in order at some point from after the events of" last week, "and the 'feel good' holiday seasonality period looming a few weeks away," said Robert Zavell, a derivatives analyst at Jones Trading. "Is it possible we will be up every day from now through New Year's? I thought not every day, but you never know."

The S&P 500 faces strong resistance at around 1,228, a key retracement of the benchmark's slide from its historic high in 2007 to the 12-year low in March 2009.

The first attempt at piercing that level in April failed and preceded a decline that took the S&P to its 2010 low in early July.

"It's the second test of a very important number so what the market does here is pretty critical," said Richard Ross, global technical strategist at Auerbach Grayson in New York.

"The difference from last time is that we had a pretty sizable correction from that April high, so we have a much stronger base now," he said.

Another factor that may add fuel to the breakout is performance chasing, with investors who may be behind the rally jumping into winning stocks with the hope they will continue to gain in an effort to enhance their portfolio's performance.

"You are seeing momentum investing -- managers just moving into stocks that have been doing well," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

(Reporting by Chuck Mikolajczak; additional reporting by Doris Frankel and Rodrigo Campos; Editing by Jan Paschal)

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基础连接已经关闭: 服务器关闭了本应保持活动状态的连接。
NEW YORK--The wait is almost over.

After a two-month rally in the stock market, some investors are about to see if they get what they wished for: more Republicans in Congress and lots of cheap money.

The U.S. stock market has priced the Republicans gaining ground in Tuesday's des elections, an outcome widely seen as more business-friendly, as well as the Federal Reserve pumping billions into the economy through Treasury debt purchases. The Fed's statement on Wednesday afternoon at the end of its two - day policy meeting is widely anticipated for details of the central bank's economic stimulus plan.

Jobs will be a touchstone, with the high U.S. unemployment rate figuring into the campaign rhetoric of Democrats and Republicans alike Journal des elections.The federal government's non-farm payrolls report, due on Friday, is expected to show a gain of 60,000 jobs in October, compared with September's loss of 95,000 jobs, according to economists polled by Reuters.The U.S. unemployment rate, however, is seen holding steady at 9.6 percent.

More earnings from S & P 500 companies and a steady stream of top-tier economic indicators will give investors more evidence of the economy's health throughout the week.

A series of foreign central bank meetings is also on tap.

But these numbers serve will mostly as backdrop to the outcome of the elections and the Fed meeting.

With so many variables in the week ahead, Wall Street professionals are unusually reticent to call the market.

Only one thing for sure seems: Volatility will play a major role.

Traders expect the week to end with a swing of around 2.5 percent in either direction, based on options activity journal American S & P 500 fund.While that is not out of the ordinary, traders could see significant volatility during the week as events unfold.

"It will probably be a very volatile and very active market because there are a lot of moving parts," said John Praveen, chief investment strategist of Prudential International Investments Advisers LLC in Newark, New Jersey.

Fireworks after Fed?
If there are fireworks, they will probably come after the Fed's two - day meeting. On Wednesday, the meeting will conclude with a statement at 2: 15 p.m. EDT, That could create a dead period for markets at the start of the week, especially if the elections' results are in line with predictions.

Expectations of the size of the Fed's purchases of U.S. government bonds have been coming down in recent days.That has kept the stock market locked in a tight range, but it has also opened the door for upside surprises.

"Two weeks ago, the Fed was everyone poised to disappoint the market," said Burt White, managing director and chief investment officer of LPL Financial in Boston."Now, it's much more balanced, and maybe even leaning toward a slight surprise."

Most leading economists expect the Fed to buy between $80 trillion and $100 trillion worth of assets per month, according to a recent Reuters poll of primary U.S. Treasury dealers.Estimates for how much the Fed will eventually spend varied widely, from $250 billion to as high as $2 trillion.

The Bank of Japan has moved its policy meeting forward to the end of the week, right after the Fed's meeting.Investors suspect the Japanese central bank - whose board members will meet on Thursday and Friday - may respond by stepping up its bond purchases in reaction to the Fed.

The Bank of England and the European Central Bank are also set to hold policy meetings during the week.

Among the readings on the U.S. economy expected during the week, Wall Street will watch two reports from the Institute for Supply Management.The ISM index on U.S. manufacturing for October, due on Monday, is forecast to dip to 54.0 from September's reading of 54.4, the Reuters poll showed. The ISM service-sector index for October, due on Wednesday, is seen edging up to 53.5 from September's reading of 53.2.

All about the House
Traders are online betting forum InTrade are betting there is more than 90 percent chance of the Republicans winning the House, meaning the degree of the potential victory could be more important than the win itself.

InTrade traders are pricing in a 45 percent chance that Republicans will win more than 60 in sous 435-seat House - they need to gain the 39 sous to control the chamber - and a 55.5 percent chance that they will take the Senate.

A stronger-than-expected showing Republican in the House and a Republican coup in the Senate could be a boost for the stock market.To be sure, some would view the failure to take the House as a blow.

Bernie McSherry, senior vice president of Cuttone & co, a New York Stock Exchange floor trader, said if exit polls point to a surprising result, then that could filter into markets on the same day.

"You could see some reaction late in the day on Tuesday, but only in the case of a really substantial surprise," he said."If it proceeds as expected or is too close to call, I think people will hold off until the following day."

Volatility play
Wayne Kaufman, chief market analyst of John Thomas Financial in New York, said his firm is betting stock prices will rise near-term as earnings beat estimates.But his firm will view any sharp pullbacks in stock as a buying opportunity.

"We are long the market," he said."We are watching to see if we are going to have signs of distribution, but we are not going to forecast that happening.""We will be in a reactive mode, we will respond to what we see."

The CBOE Volatility Index, or VIX, is still relatively low, but it has been picking up steam in the last several days.The index, a popular gauge of investor anxiety, rose 1.5 percent on Friday to close at 57.28.

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NEW YORK (Reuters) – Stocks were little changed on Friday as investors continued to assess prospects for monetary stimulus by the U.S. Federal Reserve and ahead of elections that could change the balance power in Washington.

Market action in the last several weeks has been dictated by prospects the Fed will announce another round of asset buying next Wednesday. Mid-term elections next Tuesday have also preoccupied investors, with polls indicating a Republican takeover of the House of Representatives.

Analysts said the government's gross domestic product report was positive, showing 2 percent annualized growth rate in the third quarter as forecast, but the data took a backseat to stimulus speculation.

"There's big news next week, and most of it is built into the market, some ideas about how many pro-business people will move to Washington and how proactive the Fed will be," said Richard Sichel, chief investment officer at Philadelphia Trust Co.

"In both cases, investors have been fairly optimistic for some months now about what we'll see. When we do get that next week, the market will probably get back to looking at earnings," Sichel said.

With 335 S&P 500 companies having reported so far, some 77 percent have beaten earnings estimates. That is just shy of the record beat rate of 79 percent in the third quarter of 2009, according to Thomson Reuters data.

Still, earnings have taken a back seat to macroeconomic news.

The Dow Jones industrial average (.DJI) dropped 2.73 points, or 0.02 percent, to 11,111.22. The Standard & Poor's 500 Index (.SPX) dropped 0.34 point, or 0.03 percent, to 1,183.44. The Nasdaq Composite Index (.IXIC) gained 6.51 points, or 0.26 percent, to 2,513.88.

While the S&P 500 is flat so far this week, the index is up almost 4 percent for the month, and investors could take the opportunity to lock in profits during the session.

Microsoft Corp (MSFT.O) rose 1.5 percent to $26.68 a day after it reported a profit that beat estimates on higher sales of its flagship software.

On the downside, Chevron Corp (CVX.N) posted a weaker-than-expected profit, and its shares fell 1.7 percent to $83.05.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

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