Daily Market Update – June 8, 2016 (7:30 AM)
On Monday, Janet Yellen spoke and the market listened.
They tried listening a little bit more yesterday, but the words may have gotten too faint, especially by the final hour.
This morning, if looking to put a positive spin on things, the market hasn’t done what if often has in the past few years.
It hasn’t just reflexively gone in the opposite direction. At least not yet.
This morning the futures are flat after having given up some decent gains yesterday, but when it’s all said and done, we are still within 1% of the all time high on the S&P 500.
Granted, the level is still being sustained by a narrow foundation, but years from now all that anyone will know is what the level happens to be. Years after the fact, no one ever looks at the underlying causes of where the market stands unless there is some large move.
What can be said with some certainty is that not much is going on and maybe what we thought might be going on next week, now won’t happen.
Following last week’s Employment Situation Report there are now even those saying that a recession is possible.
The odds of that, according to JP Morgan economists of occurring in the next 12 months, is now considered larger than was the likelihood of an interest rate hike in June, just a week ago.
Maybe Yellen is right that we shouldn’t put too much emphasis on a single data point. After all, we could just as easily get big revisions next month or the month after, but that’s not how the universe of traders works. They focus on only the latest number and rarely look at the big picture. If one number takes you in one direction today and does so with conviction, no one should be surprised if the following data another conflicting number takes traders in a totally different direction.
Reverse the order of events and the outcomes are reversed as well, even as the net change may not be.
The individual investor is left hoping to be lucky, if deciding to capitalize on some economic news.
With the week at the halfway point, it may simply end up as another week with little to nothing to show for it, in terms of active trading.
While no one expects any FOMC action next week, their words may still carry clout, so it may be difficult to commit in any meaningful way next week, either.