Good morning and Happy Wednesday. I've gotta hop to an early meeting so I'll keep this brief. Traders are watching oil and commodities in the early going today as well as sifting through the commentary on what to expect from Janet Yellen's speech in Jackson Hole, which is scheduled for Friday morning at 10:00am.

On the oil front, while crude is not the focal point it was early in the year, the price of oil remains a focal point. There are two reports putting pressure on crude this morning. First was the data from the American Petroleum Institute showing that stockpiles of crude unexpectedly rose last week in the U.S. Next, there is word that Iran may not attend next month's OPEC meeting in Algiers. And then there is the worry that an output cut by OPEC wouldn't actually help the cartel as much as other producers (think U.S.).

Concerns about oil are also spilling over into the macro theme. The thinking is that any further decline in crude prices will trigger worries about global growth. On this subject, the bears point to the price of copper, which fell again overnight and is currently at risk of giving up all of the gains seen in 2016.

However, make no mistake about it; the big focus in the market continues to be the Fed and Ms. Yellen's speech on Friday.

This morning another Fed Governor has weighed in as Dallas Fed President Robert Kaplan said it is appropriate for the U.S. central bank to remove some of the policy accommodation and move towards a more neutral stance. In English, this means its time to start returning rates back to more normal levels. Kaplan joins Vice Chair Stanley Fischer and NY Fed President William Dudley on the list of Fed officials supporting rate hikes in the near-term. So, again, all eyes will be on Janet Yellen Friday and the bottom line is stocks may continue to waffle into the event.

From a technical standpoint, I've been writing for some time now about the idea that a new bull market began in February. This morning, I've drawn in the appropriate trendlines on the chart to illustrate this point. While we tend to focus our attention on the near-term action, sometimes it is just as important to take a step back and look at the bigger picutre. And from my seat, once we get the near-term negative seasonality out of the way, there are far more reasons to be bullish than bearish.

S&P 500 - Daily

View Larger Image

Publishing Note: I am traveling the rest of this week with a couple very early meetings. Thus, reports will be published as my schedule permits.

Current Market Drivers

We strive to identify the driving forces behind the market action on a daily basis. The thinking is that if we can both identify and understand why stocks are doing what they are doing on a short-term basis; we are not likely to be surprised/blind-sided by a big move. Listed below are what we believe to be the driving forces of the current market (Listed in order of importance).

      1. The State of Global Central Bank Policies
      2. The State of U.S. Economic Growth
      3. The State of Oil Prices

Thought For The Day:

"The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails." -- William Arthur Ward

Wishing you green screens and all the best for a great day,

David D. Moenning
Chief Investment Officer
Sowell Management Services

Looking for a "Modern" approach to Asset Allocation and Portfolio Design?

Looking for More on the State of the Markets?

Investment Pros: Looking to modernize your asset allocations, add risk management to client portfolios, or outsource portfolio design? Contact Eric@SowellManagement.com

Disclosures

The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report is for informational purposes only. No part of the material presented in this report is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any investment program.

Any investment decisions must in all cases be made by the reader or by his or her investment adviser. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that the investment objectives outlined will actually come to pass. All opinions expressed herein are subject to change without notice. Neither the editor, employees, nor any of their affiliates shall have any liability for any loss sustained by anyone who has relied on the information provided.

The analysis provided is based on both technical and fundamental research and is provided "as is" without warranty of any kind, either expressed or implied. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

David D. Moenning is an investment adviser representative of Sowell Management Services, a registered investment advisor. For a complete description of investment risks, fees and services, review the firm brochure (ADV Part 2) which is available by contacting Sowell. Sowell is not registered as a broker-dealer.

Employees and affiliates of Sowell may at times have positions in the securities referred to and may make purchases or sales of these securities while publications are in circulation. Positions may change at any time.

Investments in equities carry an inherent element of risk including the potential for significant loss of principal. Past performance is not an indication of future results.

Advisory services are offered through Sowell Management Services.