- Moving the markets
The major indexes climbed higher for the second day in a row, as investors waited for the latest inflation report due tomorrow. The report is expected to show a slight drop in the annual inflation rate to 3.1%, which would ease some of the worries about rising rates.
Investors have already accepted that the Fed will hike interest rates by 0.25% at its next meeting on July 25-26. The question is what the Fed will do in September, given the strong job growth in recent months. The Fed doesn’t want to see wages and prices go up too fast, so it may signal more rate hikes to come.
The market rally today was driven by a short squeeze, which pushed up the Small Caps stocks, especially in the last half hour of trading. Some investors jumped on the bandwagon, fearing they would miss out on the gains.
The bond market was mixed, with the 10-year yield falling slightly, while the US dollar weakened and hit its lowest level since June. Gold finally kept its momentum and moved closer to its $1,950 mark.
The market mood could stay positive if the inflation report tomorrow meets or beats expectations. But if inflation turns out to be higher than expected, equities could turn sour quickly.
- “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 major indexes surged in the final hour of trading and ended with strong gains. The rally was supported by a wide range of stocks and increased the bullish momentum of our Trend Tracking Indexes. The inflation reports due tomorrow and Thursday will test the market confidence, as higher-than-expected inflation could trigger a sell-off.
This is how we closed 07/11/2023:
Domestic TTI: +5.88% above its M/A (prior close +4.70%)—Buy signal effective 12/1/2022.
International TTI: +6.81% above its M/A (prior close +5.80%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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