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Fed Minutes Could Determine Rally’s Fate

Fed Minutes Could Determine Rally's Fate

This Week's Market-Moving Events

Earnings season will give the market a chance to take stock of current valuations. Headliners this week include announcements from Alcoa (AA), Yum Brands (YUM), Costco (COST), Family Dollar (FDO), and Pepsico (PEP).

Mark Your Calendars

Reporting season may take a back seat to Wednesday's release of the latest Federal Reserve minutes. The market has rallied nicely off of last Thursday's low, but remains in an indecisive state. The Fed minutes could decide which way things break next. From Marketwatch:

The Federal Reserve sent mixed messages at its policy meeting last month -- keeping "considerable time" and "significant underutilization" in its statement while releasing a hawkish interest rate forecast for 2017. This split is expected to be also clear in the minutes of the Fed meeting, will mainly highlight what hawks and doves on the Fed policy committee argue about when no one is listening. The Fed will release the minutes of its Sept. 16-17 policy meeting at 2 p.m. Wednesday.

Emotions vs. Facts

With the recent up and down nature of the stock market, it is a good time to take a step back and ask (a) how important is it to participate in every rally, and (b) how relevant was last Friday's pop in equities? The answers can be found in this week's stock market video.

Investment Implications - The Weight Of The Evidence

The chart below was shown on Twitter last week and appears in last Friday's video above. The version below shows the S&P 500 remained below three areas of key resistance after Monday's up and down session.

$SPX S&P 500 Large cap Index INDX - Updated Version of Resisatance Chart

Our allocations account for the market's indecisive state; we hold some stocks (SPY), bonds (TLT), and a large offsetting stake in cash. As always, we will monitor the market with a flexible and open mind before, during, and after the release of this week's Fed minutes.


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