- Moving the markets
The tech sector led a rebound on Wall Street today, as investors snapped up bargains after a brutal week. The S&P 500 and Nasdaq Composite both gained ground, while the Dow lagged due to Boeing’s woes.
The rally in tech stocks came as bond yields eased, making the sector’s lofty valuations more attractive. Yields have been rising lately on expectations of higher inflation and a less dovish Fed.
This week, we’ll get more clues on the inflation front, with the CPI and PPI reports due on Thursday and Friday, respectively. Will they show that the Fed’s 2% target is still a pipe dream? Probably.
Speaking of the Fed, two of its officials gave mixed signals today on the outlook for monetary policy.
Logan hinted at the possibility of another rate hike, while Bostic projected a rate cut in the third quarter. They also disagreed on whether the Fed should slow down its balance sheet reduction. Confused? So am I.
The markets shrugged off the Fed chatter and focused on the positive. The MAG7 stocks, which have been underperforming this year, staged a comeback, helped by a short squeeze in the most hated names.
The dollar slipped a bit, but gold couldn’t capitalize on it. The yellow metal retreated from its recent highs but held above the $2,020 level. Crude oil, on the other hand, took a dive, dropping below $70 a barrel. That’s good news for drivers, who are enjoying the lowest gas prices since May 2021.
But how long will this relief last?
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 recovered from their slump, thanks to lower interest rates on bonds. The markets had their first positive day of the year.
Our TTIs reversed their recent decline and headed higher.
This is how we closed 1/8/2024:
Domestic TTI: +7.98% above its M/A (prior close +6.83%)—Buy signal effective 11/21/2023.
International TTI: +7.00% above its M/A (prior close +6.53%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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