Morning Market Thoughts

by DAN Good morning. Equities are opening lower this morning, giving us one of those rare red boxes on the upper right side of the chart. However, there is no telling whether those red boxes will remain, or whether they’ll morph into white boxes with green trim. This is the way of the market — a slight open up or down, and then a retracement of the move. Viola! Another trading day in a very very narrow range.

Believe it or not, the influence on traders seems to be an event that is on Friday, when Janet Yellen speaks the Fed Symposium at Jackson Hole, Wyoming (a truly magnificent place). This is the annual confab where the central bank leaders make big pronouncements — and that tend to move markets. Add to this upcoming market moving event the statement that Stanley Fischer said yesterday that the Fed is close to hitting its targets for 2% inflation and full employment and you’ve got a recipe for….a rate hike.

Yes, we could hear a statement come out of Montana this week that a rate hike is imminent. And such a statement would help fulfill the historical status of August as being one nasty month.

I’ve been trading a long time, and I remember when the Fed was only relevant before their meetings. Maybe once/month they’d be in the financial news for a day or two. No big deal, really. Then CNBC started doing “the briefcase indicator” on the morning of the Fed meeting. Cameras would follow Easy Al through the streets and Joe Kernen, David Faber, and Mark Haines would hold a semi-serious discussion of how thick the briefcase was. If it was thick, a change in policy was coming. If it was thin, the Fed would remain pat. It was a light hearted way to have fun, and create some drama in an industry that could otherwise be seen as kinda boring.

Well those days are gone. All anyone seems to care about is whether the Fed is going to hike rates. It is an obsession with just about everyone.

It is a binary relationship.

No sign of a rate hike = buy stocks. Hint that a rate hike is being considered = sell stocks.

Actual rate hike == pink unicorn. It’s never gonna happen…at least not until after the election.

We’re gonna see some relatively narrow, choppy action this week — basically, more of what we’ve been seeing for a while. Embrace it, hate it, but don’t be consumed by it. Be very selective in your stocks, and keep only a reasonable amount in your watch list. Leverage the forum for additional stock ideas. Collectively, the forum covers a lot of stocks because members tend to have different lists. Use your buddies there. It will be a big help.

See you there.

–Dan

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