Major averages finished mixed yesterday on lower volume. The NASDAQ Composite has regained its 50-day moving average over the past two days, and both it and the S&P 500 are within range of their prior all-time highs.
Fed Chair Janet Yellen testifies today before the Joint Economic Committee at 10am ET. This is the first time since the election she will address monetary policy. The Fed's stance has been hawkish given their view of the economy, thus CME Fed Futures are pricing in a 90.6% chance of a rate hike when the Fed meets in December. Recently-released excerpts indicate that a policy rate move will be "appropriate relatively soon."
It could be argued that markets overreacted and/or were manipulated sharply lower on September 9 when Fed President Eric Rosengren turned hawkish saying the US central bank could resume gradual rate hikes as the risks facing the economy are more in balance. Markets then recovered in anemic fashion.
Nevertheless, it would not come as a surprise to see some sort of correction prior to the conclusion of their meeting on December 14. Indeed, the number of leading names remains scant. Our Focus List is down to just 4 names.
But don't try to predict a future that does not exist. We remain fluid by closely monitoring price/volume action and running our screens.
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