Trading Range = Indecision
I have a quote on my wall that states, “it’s not the destination, but the journey!” After the last two days in the markets I think it applies. The destination is for the market to move higher over time and for now the journey is getting interesting. Up and down movement based on the thought of the day. It seems like investors are awakening each day with a new thought or conclusion about the best route to take on this journey higher.
The sobering effect of higher interest rates gets credit for the move lower yesterday. In fact today’s Chart of the Day is the Treasury bond. The impact of higher rates is far reaching and definitely will have an impact on the economy. Thus, the mild case of selling. Regardless, there is still an underpinning of strength and money that wants to push prices higher. Beware of the bullish sentiment.
The trading range remains in play. The bounce off support was lead by tech and specifically semiconductors. Metals and commodities have been in on the push higher and energy has now joined the game. We tested the May high yesterday and pulled back. thus, the trading range is still in play. Do we test the lower end of the range the balance of the week? Good question. We will have to be patient and let this play out before wading into the markets.
Jobs data on tap today with more housing news. This is not expected to be anything profound. Jobless claims could give a glimpse of what to expect next week from the May jobs report. The new home sales are expected to be higher on the reduced prices and lower mortgage rates in April. That could change looking forward as rates moved higher and mortgage applications are on the decline. The housing market is still on the mend, but has a ways to go. The same is true on the job front.
Plenty to think about the balance of the week. The most important however is money mangement. Determine the risk you are willing to accept in this current environment relative to your objective. Look for the opportunities. I am seeing more and more as this trading range plays out. Technically speaking the longer this range is in play the more definitive the resulting direction will be. Be patient and let the market define the direction not your ego.
