- Moving the markets
The minutes of the Fed’s June meeting revealed why they decided to hold off on raising interest rates this time. But they also hinted that more hikes are coming in 2023, as they remain confident about the economic recovery.
This made some traders nervous, as they were hoping for lower rates sooner rather than later. They seem to ignore the Fed’s warnings about persistent inflation, which hasn’t even peaked yet. They might be in for a rude awakening when reality hits them hard.
The stock market started lower, but then bounced back as some short sellers covered their positions. However, the rally fizzled out and the indexes ended in the red. They couldn’t break above the resistance levels that have been holding them back.
The bond market saw higher yields across the board, except for the short-term ones. This boosted the dollar and weighed on gold, which reversed its early gains and closed lower.
China announced new restrictions on chip materials, which could hurt the semiconductor industry. But NVDA seemed unfazed by the news, as it closed higher. I wonder if this resilience will last, as we enter the second half of 2023.
- “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 was flat, as traders waited for more clues from the Fed about its future plans. Our TTIs dipped slightly but stayed well above their bullish thresholds.
This is how we closed 07/5/2023:
Domestic TTI: +4.73% above its M/A (prior close +5.18%)—Buy signal effective 12/1/2022.
International TTI: +7.28% above its M/A (prior close +8.05%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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