Fed Official Boosts Market With Dovish Comments, Gold Nears Record High

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets 

The stock market edged up slightly today, continuing its November comeback, after a Fed official hinted that interest rates may not go up any further. Christopher Waller, a Fed governor, said he was confident that the current policy was enough to cool down the economy and bring inflation back to the 2% target. He spoke ahead of the next Fed meeting on December 12-13.

The slight gain today came after a strong month of trading, which will end on Thursday. The S&P 500 is set to end the month with an 8.4% increase, more than making up for the 7.1% drop in September and October. But this also shows that the November rally was not as impressive as it seemed.

The market is now in a wait-and-see mode, as investors look for clues from holiday spending trends. The bulls and the bears are still in a stalemate. And that means that the market may be more choppy than smooth.

The economic data today was not very encouraging, as it showed signs of a slowing economy. Home prices, consumer confidence, and manufacturing all came in below expectations. The economic surprise index took a hit, as the effects of the government stimulus faded.

The Fed governor also warned that the recent easing of financial conditions may not last, and that policymakers should not rely on them to do their job. He said that many factors can affect financial conditions, and that they should be careful.

The market moved sideways for most of the day but managed to squeeze out some small gains thanks to a short squeeze. Bond yields and the dollar both fell, helping the stock market. The 10-year yield dropped to a nearly 4-month low, and the dollar hit another low.

Gold benefited from the weak dollar, and rose to $2,042, close to its record high. Will it break that level this quarter?

2. Current “Buy” Cycles (effective 11/21/2023)

Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.

If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.

3. Trend Tracking Indexes (TTIs)

The major indexes barely moved today, as they stayed close to the previous day’s levels. The market closed slightly higher, but our TTIs showed some difference between the domestic and international markets. The Domestic TTI fell a bit, while the International TTI rose slightly.

This is how we closed 11/28/2023:

Domestic TTI: +1.62% above its M/A (prior close +1.71%)—Buy signal effective 11/21/2023.

International TTI: +3.59% above its M/A (prior close +3.26%)—Buy signal effective 11/21/2023.

All linked charts above are courtesy of Bloomberg via ZeroHedge.

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