[Chart courtesy of MarketWatch.com]
- Moving the markets
After yesterday’s strong rebound, the markets opened on a weak note with the major indexes spending the entire session below their respective unchanged lines trying to find some footing.
Not helping matters early on was a worsening of trade relations with China, which to me has now morphed into an all-out trade war, as a Chinese company has told all of its employees to boycott American products and halt international travels to the U.S. That kept the markets on a slippery footing until the Fed released its minutes on interest rates from its last meeting.
The Fed, as expected, revealed that their members are comfortable being “patient” on their current stance on interest rates, a position which could last “for some time.” While officials were split on the rate outlook over the long term, no one wanted to rock the boat “and push for a near term policy shift in either direction.”
In the end, the Fed’s announcement was not enough to keep the bears in check, and, after a mid-day rally, we dove into the close with selling picking up due to the White House ramping up its trade war rhetoric.
Where do we go from here? While our Trend Tracking Indexes (TTIs) continue to support the bullish theme, there are two indicators, which are flashing warning signs. The first one, thanks to Bloomberg, is a Boom-Bust indicator charted against the S&P 500, while the second one is the Global Money Supply Index.
Both are forecasting a potential decline in stocks, however, as always, the timing of it is the big unknown. For that, we will rely on our Trend Tracking Indexes (TTIs) to point the way towards the exit doors, once the need arises.(more…)