X
X
Tired?
Unfocused?
Off your game?

Read our free Dr K report on how to optimize your mind and body so you can boost your focus when trading the markets.
YES, SEND ME THE REPORT !
NO, I'M NOT INTERESTED
Your email will always remain private.

Market Lab Report - Premarket Pulse 7-10-17

Major averages rose on lower volume on Friday's strong jobs data. Nevertheless, rip-tide markets struggle for direction as the tug-o-war remains between rising interest rates and diminishing quantitative easing also known as QE. QE has been the fuel that propels stock markets higher while the prospect of higher interest rates, while bullish if it is believed the economy is truly on the mend, has a history of inducing major bear markets. The "Three Steps and a Stumble" phenomenon is well known and occurs when the US Federal Reserve hikes three times in the face of a strengthening economy. While not an exact science whatsoever, bear markets have often occurred on or after the third rate hike as the Fed's attempts to cool the economy prove too aggressive. This time, however, the economy is the furthest from overheating but rather remains questionable at best. Unfortunately, central banks have no choice but to tighten monetary policies since interest rates still sit at or near all-time record lows. 

As major central banks continue to discuss possibilities of slowing their respective stimulus programs, the prospect of higher interest rates at home and abroad puts a lid on how fast stock markets can rise. The European Central Bank suggested that they are unlikely to cut interest rates further below zero while the Bank of England may be raising rates for the first time in 10 years as soon as this November. Rates in the UK stand at a record low of 0.25%. Meanwhile, the US Federal Reserve's minutes showed that "several" members were in favor of starting the reduction of its $4.5 trillion balance sheet within a "couple of months." CME FedWatch tool shows the December FOMC meeting as the most likely time for the next rate-hike with an implied probability of 61.7%.

But central banks don’t have as much room as they think as the economy at home and abroad remains sluggish. On Thursday, employers added a seasonally adjusted 153,000 jobs during the month, below the 180,000 jobs that a consensus of economists had forecast. But Friday's jobs report showed strength coming in ahead of consensus estimates. The Fed sees steady employment gains as further proof the economy has mostly healed from the Great Recession and some worry low unemployment could trigger a surge in worker pay that sparks inflation. This gives them another reason to hike rates by their December meeting later this year. Of course, these numbers remain suspect as the number of people who have given up looking for work is an important factor while other important facets of the economy including productivity growth and GDP remain in question.

Remain opportunistic to profitable opportunities but keep stops tight as always as discussed in this past weekend's Focus List Review as the market attempts to find direction.
Like what you read?
Let us help you make sense of these markets by signing up for our free Market Lab Reports:
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
FOR OUR FREE MARKET LAB REPORT :
Copyright ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing.
All Rights Reserved.
privacy policy