FULL ARTICLE: https://midasletter.com/2020/09/is-the-stock-market-off-to-the-races-again/
Markets are up slightly today after a decline from its meteoric rise over summer 2020. There have been selloffs in the high-flying technology stocks, with some big names trading below their 50-day moving average for the first time in a while. But, a consolidation is always healthy after such a large move in stocks. So, a question you may be asking is: could this be the start of another big rise in the stock market and what should we look for this week as traders?
You’ve heard us talking about this quite a bit… The elephant in the room when it comes to markets and especially liquidity in the markets… The fed. The single largest driver in prices across all asset classes.
The fed has set up an expectation that they will be dovish (keep interest rates low) forever. There is also the expectation they will always be around to prop up all assets, continue to purchase large amounts of corporate debt and even buy equity etf’s… Investors want to have the guarantee they will be there to support the stock market and economy forever… But can that be true?
On Wednesday, Jerome Powell and the Fed provide their latest interest rate decision at the FOMC. The market is seeking to see details of how the fed will operationalize their average inflation tarted approach and provide some additional forward guidance. Will they be specific with defining time periods or will those targets be outcome based?
There could be a chance of disappointment… Traders want more clarity so transparency from the fed will be the determining factor in how markets will react after the meeting.
Watch the full interview to see trading strategies for the fed FOMC meeting, the correct risk-to-reward ratios to use in uncertain times, and what earnings reports to look forward to this week.
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