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I could almost hear the sigh of relief from Cincinnati when the Friday jobs report came in higher than expected.
It was useful to note that stock futures didn't really move lower, but the Treasury yield did. That, my friends, is a pretty clear sign that the market is absolutely, positively counting on the Fed to juice the market with another rate cut in 12 days.
Now, interestingly, the last Fed meeting saw a drop in rates just as the market anticipated.
The S&P 500 was around 3,015 just ahead of the announcement. At the time of writing, we're at 2,983.91 – and trying like mad to get back to 3,015 just before the next meeting that is likely to yield the same action from the Fed.
So here's how I think it'll play out – and what you should do about it…
Why the Market's So "Hazy" Right Now
The headlines that fueled the rapid rally last week and yesterday were spurred by the announcement that negotiators from the United States and China will meet in Washington, D.C., in October after some pre-meeting calls in September.
The news got everyone hyped about a deal happening, and boom goes the rally. But now, though, I'm detecting a little more… let's call it… "ambiguity" in the administration's comments.
Unstoppable: While the markets were in a tailspin in October, I've managed to pull off a perfect track record in closed trades – all with the help of my new Infrared Index. Strike now if you want in…
- "The United States wants to pick up from where it left off in the May trade talks."
- "There has been no specific date set for October trade talks."
- "The administration does not want to speculate if the October tariff rate increase will be delayed; that is the president's decision."
- "If there are no results from upcoming meetings, additional actions will be taken."
- "China should not underestimate President Trump's will on China and the bipartisan support he has on this issue."
- "President Trump will not relent on this trade dispute."
For what it's worth, I believe that the trade war may ultimately be a positive pivotal point in our long-term economic picture – we just have to make it through.
That said, the constant stream of headlines, comments, no comments, allegations, etc. continues to cast a haze over the market.
These comments made me think… "Here we go again."
Now, the one clear thing that we can count on in a hazy market is the technicals.
Here's What the Market's Telling Us
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.