The major indexes are poised to open higher as volatility cools off.
The fact that volatility is cooling off is a good sign. And if it continues its downtrend, it’ll be bullish for the market.
Another good sign is that the bond market continues to trade sideways.
We’re at a higher risk for a recession right now… And when we’re at a higher risk for a recession, the Federal Reserve is likely to refrain from raising interest rates to avoid adding further stress to the economy. And by trading sideways, the bond market is pricing that in.
The broader indexes ticked higher after the open as Wall Street looked to build on Tuesday’s afternoon rally.
Chip stocks are gaining strength, as we can see in the VanEck Semiconductor ETF (SMH). When semiconductor and other speculative stocks have bottomed out and are on the way back up, it’s a bullish sign for the broader market.
Another good sign is that the long bond, iShares 20-Plus Year Treasury Bond ETF (TLT), continues moving higher. I expect it to hit the $120 level before falling again because we know that long term, interest rates are going higher. But right now, this upward trend in the long bond is giving the stock market some relief.
As I mentioned in Tuesday’s recap, we have the FOMC minutes from the Fed’s June meeting coming out Wednesday afternoon, which should give us an idea of how the central bank is feeling about its interest rate hikes.
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