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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.
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For instance…
- "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 highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Straight-Up Profits. He also contributes to Money Morning as the Quant Analysis Specialist.