We experienced a week full of mixed data leaving me with mixed feelings in the market. According to market data, several markets appear to have traded with lower volume figures than normal this week indicating that the mixed feelings in the market may be widely felt. Nevertheless, when markets get very consolidated and quiet that is typically the time that markets are about to change and surprise us all. We have two highly anticipated events coming up including the FOMC meeting and the elections shortly thereafter.

The housing starts number surprised the market with much stronger than expected starts of 1.772 million homes vs. 1.650 expected. This seemed exceptionally bullish for the market until the permits came out noticeably weaker than expected. (The permit number is important because it measures the number of housing starts expected next month.) The mortgage application number was down as well at 585.8 versus 599.1 as expected. Between permits and housing starts, the near future of the housing market continues to look weak. Besides the housing market, we are still taking a look at anything that will give us an idea of where we stand with inflation. PPI and CPI both came out a little below expectations indicating that the threat of inflation is deteriorating at the moment.

FED Watch - There are no more major reports scheduled to be released prior to the Fed decision. At this point, the Fed is highly expected to keep rates unchanged. In which case, I don't foresee any major change in the market. If the Fed changed rates, I believe that they would lean towards raising rates as a result of the comments made in the last FOMC minutes. What would likely happen if the Fed decides to raise rates? The dollar would rally. The Eurocurrency would likely fall. The Ten Year Notes and US Bonds would likely break major support. The stock market would likely sell off and break support although this could be debated. If the fed raised rates, it would mean that the fed recognizes that the economy is strong. It could also sell off in anticipation of a further slowdown in the housing market. Needless to say, the FOMC could trigger a shift in the markets if they surprise us.

December Ten Year Note Technical Levels:

Trend Direction: Long term Trend Down, Short Term Trend is flat - down. Look to sell on a break below or close below 106-26.0. Likely consolidation to continue ahead of the FOMC meeting.

Resistance: 107-13.0, 107-28.0, 108-17.0

Support: 106-28.0, 105-24.0

Financial Reports for the week of October 23rd-October 27th:

Tuesday: FOMC Meeting - 1:15 pm CST

Wednesday: Exising Home Sales - 9:00 am CST

API/EIA Energy Stocks - 9:30 am CST

Thursday: Weekly Jobless Claims - 7:30 am CST

Advanced Durable Goods - 7:30 am CST

EIA Gas Storage - 9:30 am CST