Market Direction Weekly Closing Numbers

Market Direction: BULLISH alert issued 6/2/2016

The economy

The stock market spent the bulk of the week inside a narrow range, but Friday was a bit more active as participants responded to remarks from Federal Reserve Chair Janet Yellen, who spoke at the Kansas City Fed Economic Symposium in Jackson Hole, Wyoming.

During her speech, Ms. Yellen said that the case for a rate hike has strengthened in recent months, but she also noted that business investment remains soft and subdued foreign demand has restrained exports. Furthermore, Chair Yellen noted that future policymakers should explore the possibility of purchasing a broader range of assets. Overall, Ms. Yellen's speech could be deemed as hawkish or dovish depending on which elements one chose to focus on.

Ms. Yellen was followed by Fed Vice Chair Stanley Fischer, who appeared on CNBC and indicated that more than one rate hike could take place, but more data needs to be analyzed before that decision is made. Stocks retreated after these comments while rate hike expectations were pulled forward.
According to the fed funds futures market, the implied likelihood of a September rate hike increased to 36.0% from 21.0% on Thursday while the implied probability of a rate hike in December increased to 63.7% from yesterday's 51.7%.

Although Friday's focus was squarely on the speech from Fed Chair Yellen, investors also received the second estimate of second-quarter GDP, which was revised down to 1.1% from 1.2%, as expected, while the GDP Price Deflator was revised up to 2.3% (Briefing.com consensus 2.2%) from 2.2%. There was no real change to second-quarter GDP, which everyone had already realized was quite disappointing despite the strong pickup in consumer spending.

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By the numbers the weekly closing index numbers compared to the initial BULLISH recommendation closing numbers: 

Stock Market Closing Numbers
compared to Recommendation Numbers
	6/2/2016	8/26/2016	Difference
Dow Jones	17,838.56	18,395.40	556.84
Nasdaq	4,971.36	5,218.92	247.56
S&P 500	2,105.26	2,169.04	63.78

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