August is traditionally a very challenging month for the market, and so far, AUG19 has certainly lived up to its reputation.  Erratic even violent price swings with big overnight gaps have tortured traders trying to make some sense of the uncertainty.  Today, markets are hopeful the FOMC minutes will provide some clues as to the thinking of the committee and their next possible rate decision.  What we know now is there were three dissenting votes for the rate cut we received last month.  The question is, what has changed?  Perhaps, we will not get any clarity until Powell speaks in Jackson Hole Friday morning.

Asian markets were mixed and mostly flat overnight as they also wait for central bank guidance.  European seem much more confident this morning solid bullish price action and green across the board.  US Futures are also pointing to a bullish open in response to strong earnings results from LOW and TGT this morning.  Be careful not to chase the opening gap keeping in mind we could easily slip back into consolidation as we wait for the 2:00 PM minutes release.

On the Calendar

On the Wednesday Earnings Calendar, we have just short of 40 companies reporting.  Notable reports include LOW, TGT, JWM, SMAR, SNPS & ADI.

Action Plan

After two days of very choppy price action, the market today is hopeful it can find some clarity as to the thinking fo the FOMC with the release of last months minutes at 2:00 PM Eastern today.  Positive early morning earnings result from LOW, and TGT has the early morning futures pushing higher to once again challenge price resistance in the index charts.  President Trump is discussing payroll tax reductions and is pushing with all his might attempting to pressure the FOMC into a 100 basis point rate cut this month to avoid recession fears.

We will also have to keep an eye on the Existing Home Sales number at 10:00 AM Eastern this morning.  The consensus expects housing sales to increase, but this is a potential market-moving report, particularly if the actual results miss estimates.  After the morning rush gap, I would not be at all surprised to see the market slip back into consolidation as we wait for the 2:00 PM minutes release.  After the release expect an explosion of volatility so be prepared for about anything to occur.

Trade Wisely,

Doug