- Moving the markets
Friday’s March payroll report was largely in line with expectations, as 236k new jobs were created, which was slightly above the 230k anticipated, while the unemployment rate dipped from 3.6% to 3.5%.
That number might compel the Fed to remain hawkish for longer with the May Rate-Hike odds now having climbed from 50% to over 70%, which had bond yields spiking first before fading.
We started the day on a weak note, as the chart above shows, but in the end a slow long grind higher, assisted by a short squeeze, pushed the major indexes back to their respective unchanged lines—with not much lost or gained.
Traders seemed to be on edge and are staring at this week’s upcoming key inflation data. Wednesday, the CPI number is on deck, which is followed Thursday by the PPI data, both of which will be key in determining what the Fed’s next move might be. Will it be a pause and an end to its hiking campaign, or will they continue with a more moderate hiking schedule? My guess is the latter.
We saw a bit of a reversal from last week’s action in that Bond yields spiked, the US Dollar bounced back, rate-hike odds rose, and gold came off its lofty high but closed above its $2k level.
All eyes are now on the release of the inflation numbers, which likely will cause traders and algos to spring back into action.
2. “Buy” Cycle Suggestions
For the current Buy cycle, which started on 12/1/2022, I suggested you reference my then current StatSheet for ETF selections. However, if you came on board later, you may want to look at the most recent version, which is published and posted every Thursday at 6:30 pm PST.
I also recommend you consider your risk tolerance when making your selections by dropping down more towards the middle of the M-Index rankings, should you tend to be more risk adverse. Likewise, a partial initial exposure to the markets, say 33% to start with, will reduce your risk in case of a sudden directional turnaround.
We are living in times of great uncertainty, with economic fundamentals steadily deteriorating, which will eventually affect earnings negatively and, by association, stock prices.
In my advisor’s practice, we are therefore looking for limited exposure in value, some growth and dividend ETFs. Of course, gold has been a core holding for a long time.
With all investments, I recommend the use of a trailing sell stop in the range of 8-12% to limit your downside risk.
3. Trend Tracking Indexes (TTIs)
Again, our TTIs changed only slightly, as the market closed the session unchanged.
This is how we closed 04/10/2023:
Domestic TTI: +1.80% above its M/A (prior close +1.19%)—Buy signal effective 12/1/2022.
International TTI: +7.18% above its M/A (prior close +7.30%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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