- The NASDAQ 100 Index has done very little during the trading session on Friday, as the market quite frankly looks like it’s got nowhere to be.
- I anticipate that we have a scenario where you will probably have to wait for some type of catalyst.
- Next week will probably be the next catalyst, as it has the Jackson Hole Symposium where central bankers will be able to bloviate, and probably say the wrong things causing quite a bit of chaos in the market yet again.
Hawkish Federal Reserve
It’s somewhat amazing that the market is convinced that the Federal Reserve is going to have to get loose with its monetary policy while at the same time the Federal Reserve is doing the exact opposite. This is a very confusing time to be trading, so if you have been struggling, do not be too hard on yourself. This is a rally that’s been very difficult to get behind, but it is because interest rates have been dropping. Keep in mind that over 70% of all volume in New York now is machine trading, so if the rates are dropping, the machines are buying stocks.
This is especially true as of late, and it’s almost impossible to trade without paying close attention to the bond markets. Quite frankly, it’s all about the bond markets right now, and nothing to do with anything else. There are only a handful of stocks that move the NASDAQ 100, see need to keep that in the back of your head as well. It’s all the usual suspects such as Amazon, Tesla, Alphabet, Microsoft, etc.
We are sitting just above the 200 Day EMA, which should be a potential victory for the bulls, but we haven’t necessarily taken off either. In other words, I think this market has no idea what to do with itself. In the video, I will show you the yields on the 10-year note to give you an idea as of the correlation currently, and how this is all about whether or not Uncle Jerome is going to give Wall Street their sugar high. The Federal Reserve has done this for 14 years and now has to deal with impetuous children. Now that the Federal Reserve governors are no longer day trading, they have no real need to goose Wall Street. In other words, I think we’re going to see more chaos before we see less.
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