Market Wants To Run – Here’s Why We Are Going To Wait 2 More Days
Posted by Pete Stolcers on June 12
Yesterday the market inched higher ahead of the historical summit with North Korea. Trump and Kim broke the ice and they exchanged niceties. This process will take months to play out and investors are giving both leaders the benefit of the doubt. Tomorrow the FOMC will hike rates and traders will scrutinize the comments. The S&P 500 is above the 100-day moving average and it wants to climb.
The summit was short on details and that was expected. I am skeptical and I believe that North Korea will drag this process out. This has been a typical ploy. They will ask for sanctions relief (just like Iran) and they will return to their old ways. Trump is aware of their past behavior and he won’t fall for that trap.
We can expect future summits to be scheduled and for now those winds are calm.
The summit yesterday should facilitate trade negotiations with China. Rumor has it that much of the framework has been completed. Once a trade agreement with China is finalized it will put pressure on our other trading partners.
Our allies opposed the steel and aluminum tariffs during the G7 summit in Canada. Trump favors a zero tariff policy, but it has to go both ways.
The Fed will hike rates tomorrow. They have mentioned accelerated tightening in 2019 and traders will pay close attention to the press conference. CPI came in at .2% this morning (in line) and inflation is not a major concern. Thursday the ECB is expected to announce the end of quantitative easing. Global interest rates are on the rise.
I am itching to get back into the market. The S&P 500 is trading at a forward P/E of 16 and stocks have grown into their valuations. We will wait two more days before getting back in. I want to see the reaction to the FOMC and ECB statements Thursday. Swing traders should be in cash.
Day traders should look for opportunities to get long today. Use the first hour range as your guide. The action should be fairly dull ahead of the FOMC.
Market commentary provided by OneOption, LLC a firm separate from and not affiliated with Regal Securities L.P. Regal Securities L.P. has not participated in the creation of the content, and does not explicitly or implicitly endorse the content.