Hey Folks, as we come to the end of the 3rd Quarter we find the markets struggling to make fresh new all time highs. In fact I was telling our members in our chat room yesterday I really did not like the price action over the past few days and the mood seems to be shifting more from bullish to a neutral/bearish bias near term. And while I feel we can still move up and make new all time highs, price action appears to need a catalyst to do so…and we have plenty of them coming up, from Q3 Earnings to more news on the China-US Trade Front. We’ve also seen a lot of indecision in the markets which of course is not only reflected in price action, but also in the views of the FED Governors. Get me take on the current market action below;
Weekly Sound-Bites:
• Well, this past trading week was clearly not without conflict…the Saudi’s Oil Refineries were attacked, the Feds cut interest rates by 25 bps, the US Money Repo Markets when crazy causing the Feds to intervene and at the end of the day, a delay to visit pig farmers causes the markets to give way to end the week slight lower…
• Market price action shows a lot of indecision and rightfully so; –the trade war with china may be cooling off, unless it’s suddenly heating up again; the US Economy is heading for a recession, unless of course it is getting better; the Feds need to cut rates more aggressively, unless it shouldn’t be cutting rates at all and finally it is time for value stocks to shine, unless traders want to go back into growth stocks…so you can see the conflict and indecision this is week’s inability to see price action top out to new all time highs…
• Of course the Feds are leading to a good deal of confusion after this past week’s FOMC Policy Statement and our very own Jerome “Power Ranger Boom-Boom” Powell’s Press Conference…while he did much better this time around (his previous efforts have resulted in markets falling for the day 82% of the time) price action fought back to recoup the days losses and finish slightly in the green…but the bigger issue is the split among voting Fed Members on the future of rate hikes…about half of the members (8 out of 17) think the policy band should be lower by another 25bps by the end of this year and 7 feel the band should be higher as we go into 2020…this shows the split among the FED Members on where rates will go…
• We’ve had some instability in the Money Markets, more commonly known as the Repo markets where the Feds had to step in for the past 3 days to provide over $205 billion in liquidity to get the overnight lending rates back down to normalized levels…historically this has indicated trouble for the Repo Markets as it lead to the final collapse of Lehman Brothers but this time the issues are different and the causes not related to banking issues…either way, this will still encourage the Feds to add to the US Balance Sheet by injecting more funds to help build the availability of US Dollars and sooth the overnight lending markets…
My Weekly Round-Up Take;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !!
hpb
