In her much-anticipated speech at the Federal Reserve Bank of Kansas City Symposium at Jackson Hole, Wyo. on Friday, Janet Yellen started out by eloquently making a clear case for a Fed interest-rate hike. Then it seems she couldn’t help herself and turned wishy-washy.
Yellen’s wishy-washiness has made the markets vulnerable in both directions. The reason is that bulls can read her statement as bullish and at the same time bears can read her statement as bearish. This chart illustrates that battle between bulls and bears.
Please click here for the chart.
The chart is a one-minute chart around the time of Yellen’s speech comparing popular ETFs including the S&P500 ETF SPY, the Nasdaq 100 ETF QQQ, a gold ETF GLD, a silver ETF SLV, a gold-miner ETF GDX, a bond ETF TLT, a dollar ETF UUP, and the VIX ETF VXX.
Intermarket analysis is one of the most valuable and easiest-to-use tools for investors. Take a few minutes to stare at the chart if you aren’t used to this kind of analysis, and you will see new insights jumping at you.
As the chart shows, after Yellen’s speech, all major markets experienced high volatility both to the upside and to the downside.
Let us dissect Yellen’s speech. Here are excerpts that ruined the clarity and made the speech wishy-washy:
- The economic outlook is uncertain
- Monetary policy isn’t on a preset course
- The ability to predict how the federal-funds rate will evolve over time is quite limited…Read more at MarketWatch
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