- Moving the markets
The latest consumer price index (CPI) report showed that inflation in July was lower than expected on a yearly basis, but still higher than the Fed’s comfort zone. The report also indicated that real average weekly earnings did not change last month, which could be seen as a positive sign for consumers.
However, the report also revealed some signs of persistent inflation. The core CPI, which excludes food and energy, rose 4.7% year-over-year, well above the Fed’s 2% target. And the headline inflation rate was still above 3%, the same as in June.
The market reaction was mixed and volatile. Initially, traders and algorithms focused on the lower-than-expected annual inflation rate and pushed the Dow up by more than 400 points. But later, they realized that the data might not be enough to convince the Fed to delay tapering its bond purchases, and the rally fizzled out. The major indexes gave up almost all early gains by the end of the day.
ZeroHedge summed it up best:
A quiet illiquid summer day which saw oil pump-and-dump, bond yields drop-and-pop, stocks spike-and-puke, gold jump-and-slump, and the dollar purge-and-surge.
It seems that nothing much changed in the big picture, but the AI boom reversal prediction is still on track.
- “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 ran out of steam and reversed course, wiping out most of the early gains. Our TTIs followed the market movement but showed some divergence.
The domestic TTI edged lower, while the international TTI managed to post a small increase.
This is how we closed 08/10/2023:
Domestic TTI: +4.17% above its M/A (prior close +4.30%)—Buy signal effective 12/1/2022.
International TTI: +6.31% above its M/A (prior close +5.92%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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