Jerome Powell’s testimony last week offered no pushback against rate-cut expectations, and if anything, actually stoked the fire. Bets of a 50 basis point cut, as opposed to 25, rose, indicating the market shifted to an even more dovish stance.
Article Category: Market Breadth
Imagine you’re huddled down in a bunker, with the enemy approaching, and you only have nine bullets left. Do you fire a preemptive shot or two, hoping it will deter the enemy? Or do you save those bullets and wait patiently until you’re sure an attack is imminent? That’s the situation the Federal Reserve is facing right now.
It’s been a busy week so let’s jump right in. We’ll begin today with a brief look at where markets stand, get caught up to speed on the earnings front, and then examine recent trends in the latest economic data.
The first thing I want to mention today is that the S&P has finally cleared its overhead resistance at 2815. As you can see below, that price level turned the index back on five separate occasions. The fact that prices are holding above this mark is a good sign, as it suggests the selling pressure at this level has subsided.
Most investors, including myself, generally sit squarely within one of two camps: bullish or bearish. My research and observations over the years have left me with a rather simple premise on which to base this judgement. When the economy is expanding, remain firmly bullish, and when growth begins to slow and recession clouds gather, get bearish.