Traders digested the steep losses of the previous Friday all week long, as the major indices stayed inside the range of the most volatile session since the Brexit-panic. The Nasdaq outperformed the other benchmarks as Apple (AAPL) led tech stocks higher, following a successful launch of the company’s latest flagship, the iPhone 7. Traders took a step back towards the end of the week, causing a decline in trading volume, as investors are more divided than usual regarding the Fed. Besides the FOMC meeting on Wednesday, the week will be all about the housing market, as building permits, housing starts, and existing home sales will all be published on Tuesday and Thursday.

Investors got a taste of next week’s central bank overload on Thursday, as both the Bank of England and the Swiss National Bank decided on their benchmark interest rates. The banks left the rates unchanged, at the record low levels of 0.25% and -0.75% respectively, acknowledging the economic headwinds. Furthermore, the dovish statement released by the BOE might leave more room for the Federal Reserve to further postpone the inevitable tightening move. On the economic front, the lackluster retail sales number and the worse-than-expected Consumer Sentiment Index were countered by a blowout Philly Fed Index, and also a bullish CPI reading. Next week’s rate decision by Yellen & Co. remains anybody’s guess, but the bond market sure signals a hike in the near future, with rising yields “across the curve.”

The technical picture is mixed, at least for now, as the Dow and the S&P 500 are undoubtedly in “correction mode,” despite the encouraging strength of the Nasdaq. The tech benchmark closed the week above both its rising 50- and 200-day moving averages, with the Dow and the S&P 500 finishing below both their short- and the long-term indicators. The Russell 2000 slightly underperformed the large-cap indices last week, but small caps are still in a slightly better shape, as the 50-day moving average is still above the long-term indicator. The Volatility Index (VIX) spiked above the crucial 20 level on Monday, but it gradually declined throughout the week to close in the red below 16.

Market internals deteriorated somewhat last week, but the Gorilla thinks that the big picture remains positive for bulls, and the recent decline might turn out to be nothing more than a normal correction. Despite the flat week, the Advance/Decline line still hit a new all-time high, as advancing stocks outnumbered declining issues, by a 4-to-3 ratio on the NYSE and by a 3-to-2 ratio on the Nasdaq. The number of new 52-week highs declined drastically on both exchanges, to an average of 30 on the NYSE and to 51 on the Nasdaq, while the number of new lows rose amid the correction to 26 on the NYSE and to 32 on the Nasdaq. On a positive note, the ratio of stocks above their 200-day moving average remained above 70% throughout the week and closed near the 72% level on Friday.

Short interest mostly moved higher on the list of the most shorted stocks on both the NYSE and the Nasdaq, as the decline in the price of oil weighed heavily on energy-related companies. Most notably, the short interest in drilling equipment provider RPC (RES) increased by almost 10%, to 48% of the float. Aviation services provider Gogo (GOGO) also experienced heightened activity, as the short interest in the stock jumped from 32% to 38%, following a 50% rally in the stock. Contract drilling company Helmerich & Payne (HP) rose to third on the list of the stocks with the highest the day-to-cover ratios (DTC), with a reading of 21. Electronic equipment distributor Grainger (GWW) took the second place behind Marriott (MAR), with a DTC of 24.

The election campaign has taken over the news flow recently, and as the presidential debates get closer, the Gorilla expects a bit stronger market reaction to political events than earlier this year. According to the most recent polls, Mr. Trump closed the sizeable gap that Mrs. Clinton had even just a few weeks ago, and prediction markets now give almost a 40% chance for the Republican nominee. The Gorilla thinks that a tight race might lead to volatile conditions before Election Day, but as of now, all eyes are still on Mrs. Yellen and the Fed. With the hope of a relief rally. Stay tuned for a crucial and central bank heavy week on Wall Street!