Janet Yellen Speaks
The Yellen speech at the Economic club of New York is out, and the immediate reaction by market participants was to “take ’em”. The S&P 500 jack-knifed from the established 2035 level straight to the next technical level (2042), and then beyond. On top of equities, investors also gave Gold, and Treasuries a lift. Crude remained lower but did come off of it’s lows.
What the good doctor did was sound cautious about moving toward the next increase for the Fed Funds Rate. That. my friends… is the bottom line. She seemed to acknowledge that economic conditions are somewhat sloppier than she thought just a few months ago (duh), and also cited global economic worries as a headwind. Dr. Yellen indicated that the Fed can only add modest additional monetary stimulus. No kidding. Thanks for coming in. Negative interest rates ?? Not a mention. Hooray.
Stocks are being led higher by Tech, and Small Caps, while Energy shares are being dragged down by lower Crude prices. This, and not Janet Yellen’s dovish stance are at this point, having an adverse impact on the Financial sector.
There are obviously two ways that we can go from here. Does a dovish Fed Chair confirming her own dovish preferences push stocks even higher ?? Does her lack of confidence in the US economy, something she clearly has had a hand in…. cause a later risk-off move ?? These are questions that, as a trader type… you have to answer in the short term… with numbers. To the up, the S&P 500 hits roadblocks at 2053, and if you’re really lucky…2062. If we do a swan dive off of the high-board, we would have to re-test both 2035, and 2028.
Ok, gang, you ready ?? Buckle those chinstraps, and let’s go.