For the last few sessions market has been building a stairs.
First 2 steps are already there, so most of the market expect investors to start climbing up. As I mentioned yesterday, several countries announced same sort of stimulus for a local economies and that includes China and Germany.
Are the incoming news positive?
In my opinion they are NOT. Might seem positive in very short term (few days), but when you think of underlying reasons they are basically saying - economy is slowing down, if we do not act now, it's going to be to late.
So everyone is waiting for Powell to speak on Friday at Jackson Hole.
Problem is that expectations changed. Up until now most of the investors expected confirmation of FED willingness to cut rates in September, but now after just a few red sessions and several additional data points on state of global economy, expectations accelerated. So investors what clear indication that FED is willing to lunch easing cycle.
They what to hear what FED thinks of yield curve inversion, and slowing economies.
Problem is I do not think they are going to hear that.
We might get a clear message again, that FED is watching and will be adjusting accordingly but there is no additional data points in the US economy to justify further actions like stronger cuts of any sort.
How does it translate to market?
There is some room for further growth, but contrary to my UPDATE yesterday, I would not expect any spectacular moves UP.
2940 level seems to be a strong resistance and if we hit that level without confidence and momentum it I would expect it to be local high. On daily basis merket is not yet overbought so it is highly probable that we might see this level today, since Asian markets edged hire today. Let's se how EU markets will do today.
If momentum, confidence and volume will be there at 2940, then we might go up as high as 2964. But fairly strong volume is necessary for confirmation.
At the end of the week I would expect a disappointment form Powell speech, so higher we will rise during the week, bigger the drop might be.
I will be watching 2940 very closely for shorts.
Feel free to leave any contrary comments. I love to challenge my thinking. Bias is the worst thing ever and now I'm feeling bearish.
First 2 steps are already there, so most of the market expect investors to start climbing up. As I mentioned yesterday, several countries announced same sort of stimulus for a local economies and that includes China and Germany.
Are the incoming news positive?
In my opinion they are NOT. Might seem positive in very short term (few days), but when you think of underlying reasons they are basically saying - economy is slowing down, if we do not act now, it's going to be to late.
So everyone is waiting for Powell to speak on Friday at Jackson Hole.
Problem is that expectations changed. Up until now most of the investors expected confirmation of FED willingness to cut rates in September, but now after just a few red sessions and several additional data points on state of global economy, expectations accelerated. So investors what clear indication that FED is willing to lunch easing cycle.
They what to hear what FED thinks of yield curve inversion, and slowing economies.
Problem is I do not think they are going to hear that.
We might get a clear message again, that FED is watching and will be adjusting accordingly but there is no additional data points in the US economy to justify further actions like stronger cuts of any sort.
How does it translate to market?
There is some room for further growth, but contrary to my UPDATE yesterday, I would not expect any spectacular moves UP.
2940 level seems to be a strong resistance and if we hit that level without confidence and momentum it I would expect it to be local high. On daily basis merket is not yet overbought so it is highly probable that we might see this level today, since Asian markets edged hire today. Let's se how EU markets will do today.
If momentum, confidence and volume will be there at 2940, then we might go up as high as 2964. But fairly strong volume is necessary for confirmation.
At the end of the week I would expect a disappointment form Powell speech, so higher we will rise during the week, bigger the drop might be.
I will be watching 2940 very closely for shorts.
Feel free to leave any contrary comments. I love to challenge my thinking. Bias is the worst thing ever and now I'm feeling bearish.
