Early morning futures were lower ahead of the 8:30 am EDT economic releases. Despite better than expected numbers from jobless claims and durable goods futures did not jump. July durable goods jumped 4.4% when economists expected a 3.4% increase. Jobless claims came in at 261,000 while 265,000 were expected. Just prior to the 2pm hour sellers were back at it sending the market back towards the day’s low. We did see another late day kick save as stocks were able to close off the lows of the session. It would not be enough to keep the market from closing down for the second straight day. Not a terrible day ahead of Yellen’s speech.
All eyes will be on Janet Yellen’s speech at Jackson Hole Friday at 10 am EDT. Most expect her to continue her dovish tone towards monetary policy. Any hint at a rate hike in September will be a huge surprise to the market. It is hard to believe she would come out and hint at a rate hike a week prior to the last jobs report prior to the next Fed meeting. At this point, anything is possible. However, the likely scenario will be Yellen sticking to a dovish tone and we’ll have to wait for the statement in a few weeks. We can guess what the market will do, but it really doesn’t do us any good to guess the direction. The obvious stance is a dovish tone will be bullish and vice versa. In the short-term we have pulled in, but the trend from the Brexit lows remains in place. It will take more than one day of a selling to end this uptrend.
There are plenty of opportunities here in this market, albeit on the swing trading and day trading end of things versus long-term trading. Those with the patience and discipline can absolutely succeed with the current conditions. Most will over-trade and hold onto trades far too long crushing their hard earned capital. Capital preservation is tremendously important and ignoring it will only lead your account lower. Stay disciplined and continue to focus on risk management.
Friday’s market should provide a bit of excitement. Whether or not it will be exciting is another story. Stick with the trend and continue to remain disciplined! We are still in overbought territory, but Yellen may be able to provide the market with an excuse to push higher.
