Waiting Game

The markets will move every day that their open, of course, but by how much often depends on future news.  So despite being open and mildly higher, the S&P 500 for example seems to be in a waiting period. The market is up, but on terribly low volume and zero volatility.

What could be causing this?  Monday evening (US time) president Trump will be making an historic visit with the leader of North Korea – Kim Jong Un.  Will there be a denuclearization agreement of the Korean peninsula made? Will it end badly? The market seems to be waiting.

What’s more, the FOMC starts a two-day meeting Tuesday evening and traders are expecting the Wednesday announcement to include another rate hike.  Will the FOMC press conference Wednesday afternoon shed more light on even more rate hikes later this year? The market seems to be waiting.

Last Friday I said, “Although I doubt this will matter much, there could be a fly in the ointment: this weekend’s G7 summit.  If the ‘negotiations’ break down, or worse, the market may take that as an indication that trade wars will indeed be heating up.”  The negotiations did go poorly, but there is still a bid in the markets so it didn’t matter…yet.

So a few things are building up that requires caution; possible breakdown of US-NoKo summit, increasing trade wars, further US rate hikes, and a rising market on very low volume.  If the markets make a sudden 2-3 day drop once the waiting game is over, don’t be surprised.