After positive action the last couple days, market players become a bit uncertain of what to expect from Fed Chair Jerome Powell on Friday morning. There are doubts that he is going to be as dovish as many hope, but how dovish does he need to be to keep the market running higher?
The bears have long predicted that there is going to come a time when the market stops celebrating more and more dovishness. The billion dollar question is whether Friday will be that day.
We have an interesting technical setup into the news and the debate over what Fed policy should be is growing increasingly intense. There is President Donald Trump, on one hand, campaigning for huge cuts, but there are many folks who are convinced that the Fed is sowing seeds of disaster by driving rates close to zero.
As I discussed in my prior post, my game plan isn't to predict what is going to happen, but to react after the news is digested. My thesis at this time is that it is going to be tough for Powell to give the market the level of dovishness it craves.
The good news is that we should have some very interesting volatility Friday to trade. There is the potential that it could be a significant turning point for the indexes, so be ready to make some moves.
Have a good evening. I'll see you tomorrow.