- Moving the markets
The stock market had a surprising comeback today, despite the gloomy outlook from the Fed and the ECB. Both central banks signaled more interest rate hikes this year, which usually dampens investors’ mood.
But traders seem to think that Powell is bluffing and won’t tighten the monetary policy too much. They are betting on a bullish market, ignoring the economic reality.
The futures markets were down last night, but the mood changed at the opening bell. The major indexes rallied all day and closed with solid gains. The economic data was mixed: jobless claims were higher than expected, but retail sales rose slightly. A short squeeze helped to boost market sentiment as well.
Bond yields fell after an initial spike, which dragged the dollar down to its lowest level in six weeks. Gold benefited from the weaker dollar and recovered some of its losses.
The market’s performance so far this month defies historical patterns. June is usually a weak month for stocks, especially for the Dow and the S&P 500. But this time, traders and algos are challenging the conventional wisdom and betting against the Fed.
- “Buy” Cycle Suggestions
The current Buy cycle began on 12/1/2022, and I gave you some ETF tips based on my StatSheet back then. But if you joined me later, you might want to check out the latest StatSheet, which I update and post every Thursday at 6:30 pm PST.
You should also think about how much risk you can handle when picking your ETFs. If you are more cautious, you might want to go for the ones in the middle of the M-Index rankings. And if you don’t want to go all in, you can start with a 33% exposure and see how it goes.
We are in a crazy time, with the economy going downhill and some earnings taking a hit. That will eventually drag down stock prices too. So, in my advisor’s practice, we are looking for some value, growth and dividend ETFs that can weather the storm. And of course, gold is always a good friend.
Whatever you invest in, don’t forget to use a trailing sell stop of 8-12% to protect yourself from big losses.
- Trend Tracking Indexes (TTIs)
The market rally persisted today, despite rising inflation and the hawkish stance of the Fed and the ECB. The latter also raised its interest rate today. Our Trend Tracking Indexes (TTIs) moved further into bullish territory.
However, tomorrow could be a volatile day due to the quadruple options expirations. I will wait until next week to see if any portfolio changes are needed.
This is how we closed 06/15/2023:
Domestic TTI: +4.98% above its M/A (prior close +3.78%)—Buy signal effective 12/1/2022.
International TTI: +9.56% above its M/A (prior close +8.67%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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