On this week’s episode of Tape Talk, Quint and Daniel review the recent rally in the market and examine the headlines to examine if this latest move is a trend reversal or simply a bear market rally.
Markets Move Higher
As the major indices reached a year-to-date gain of over ten percent recently, it begs the question of what has changed in the past two months. Investors likely remember the market turmoil going into the holiday season which saw stocks violently decline into Christmas. Yet, in a few short weeks, the market has all but shrugged off the concerns it seemed to have in the recent past. While trade tensions seem to be quieting and government shutdown negotiations seem to be on the upswing, it might behoove investors to question whether we are completely out of the woods on either of these issues.
The Federal Reserve Backstop
The Federal Reserve, with its program of quantitative easing, has supported riskier assets for a decade now. Much of the recent market volatility might easily be credited to the Fed’s methods and comments towards tightening this easy money policy. After Fed Chair Powell’s remarks late last year seemed to rock the markets, his language towards future tightening has significantly softened and pushed markets higher. If this correlation continues investors may be well served by cautiously listening to the Fed’s future language and assessing the market’s reactions to it.
Levels to Watch
While the market has currently returned to an area of indecision, Quint breaks down what level’s he is looking for as an indication that the market has chosen a direction from here.