- Moving the markets
The markets were nervous as they awaited the CPI report for July, which will be released tomorrow, and the PPI report for the same month, which will come out on Friday.
These reports will show how much prices have changed for consumers and producers, and they may influence the Fed’s decision on interest rates. The markets hoped that inflation would slow down enough to make the Fed stop raising rates, a wish that had fueled the 2023 rally.
But the markets also feared that inflation was still lurking around the corner, and that the official numbers might not capture the true picture. The markets wobbled and wavered, but ultimately the pessimists prevailed, and the major indexes ended lower.
Other factors also weighed on the markets, such as China’s deflationary pressures, Italy’s backpedaling on bank taxes, and doubts about the AI boom. But all eyes were on the looming CPI report, which could make or break the market’s mood.
US banks suffered another day of losses, bond yields were mixed but the 10-year stayed above 4%, and the dollar was unchanged. Gold fell to its lowest level since March, while crude oil reached new highs for 2023, with WTI above $84 a barrel.
One of the most notable losers of the day was NVDA, the leading chipmaker for AI applications. NVDA dropped to its lowest point in a month, down 12% from its mid-July peak. This raised questions about whether the AI boom was losing steam, as this chart suggests.
Is history repeating itself?
- “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)
Traders were nervous about the inflation numbers that will be released soon. They did not want to take any risks before knowing how much prices have changed. This weakened the markets, and the major indexes fell.
Our TTIs also followed the downward trend.
This is how we closed 08/09/2023:
Domestic TTI: +4.30% above its M/A (prior close +4.60%)—Buy signal effective 12/1/2022.
International TTI: +5.92% above its M/A (prior close +6.03%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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