Will Yellen inspire the Bulls or the Bears?

The speeches out of the Jackson Hole gathering are always important, but it seems that this year all eyes are focused on the event.  Expect a lot of volatility around the Yellen and Draugi speeches.  The big question is which team will be inspired, the Bulls or the Bears?  As they talk, expect quick price fluctuations in both directions as the market reacts to every syllable they deliver.  A direction may be determined today, but the problem is we have no idea which way that will be.  Currently, the index charts and the transports are not showing much confidence, but that could change quickly or become much worse as they speak.  Be very cautious.

On the Calendar

The Economic Calendar on this last day of the week has a couple of heavy hitters this morning.  First up to the plate is the Durable Good Orders at 8:30 AM Eastern.  This number has had some volatility with a big 6.5% rise in June followed by a 5.8% decline in July.  Underneath all the bumpiness Durable Goods orders have been strong and are expected to stay so for today’s reading.  At 10:00 AM we get a speech from the Fed Chair from the Jackson Hole Symposium.  Some are suggesting she will deliver a historic speech clearing the way for more rate increases.  Others speculate the big speech will come from Mario Draugi around 3:00 PM.  Suffice it to say the world is watching and waiting to react to every utterance they deliver.

The Economic Calendar only has about 20 reports expected today.  I quickly looked through them and didn’t see any that I would deem as market moving reports.  However, it is still very important for everyone to stay on your toes checking for reporting dates of those you own or are thinking of adding to your portfolio.

Action Plan

Yesterday I warned of the possible pop and in the morning and unfortunately, this is exactly how it played out.  Please understand that was not a prediction but merely an observation of the price action that gave me the clues.  After the initial volatility, the market became very choppily and flat.  If I were to venture a guess why; it would be because everyone is waiting for the Yellen Speech at 10:00 AM eastern today.

With so my eyes on these speeches and so much speculation as to what they may or may not say we should expect some considerable volatility as they begin to speak.  Don’t be surprised to big reactions whipsaw price action as the market reacts to every utterance.  The good news is the stalemate between the Bulls and Bears could end today.  The bad news is we have no idea which team will come out the winner.  Be very cautious!

As normal I will be much more focused on taking profits ahead of the weekend than looking for new trades.  However, if by chance a direction is made clear, I will be prepared to act.  Over all the index charts currently do not look very healthy so once again I will say be very cautious.

Trade Wisely,

Doug