- Moving the markets
The stock market was in a slump for the third consecutive day on Wednesday, as investors awaited Nvidia’s earnings report after the market closed. Nvidia, the leading chipmaker, had seen its stock price skyrocket by 230% in the past year, but some analysts worried that it was overvalued. The stock dropped 2% on Wednesday.
The market needed a spark to ignite a rally, and some hoped that Nvidia could provide it. But the prospects of interest rate cuts, which had boosted the market earlier, had faded away.
The Federal Reserve seemed reluctant to lower rates, especially after the economy showed signs of heating up last week. The Fed released the minutes of its January meeting on Wednesday, which confirmed its cautious stance on rates. The Fed was more concerned about cutting rates too early than keeping them too low for too long.
This dampened the market’s expectations of rate cuts in 2024, which fell to a 50-50 chance of 3 or 4 cuts.
The bond market reacted to the Fed’s hawkish tone, pushing the yields higher. The 10-year yield reached its highest level since Thanksgiving. The dollar weakened, while gold was flat. Oil prices rebounded to $78 a barrel.
The market managed to recover most of its losses in the last half-hour of trading, thanks to a surge of buying and a short squeeze.
But the fate of the market still depended on Nvidia’s earnings. Will Nvidia deliver a stellar performance and lift the market’s mood?
Or will Nvidia disappoint and drag the market down?
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 stock market recovered all its losses in the final half-hour of trading and ended the day with a small gain. The Dow and the S&P 500 both closed slightly above their previous levels.
Our TTIs also followed the upward trend and finished a bit higher.
This is how we closed 2/21/2024:
Domestic TTI: +7.96% above its M/A (prior close +7.74%)—Buy signal effective 11/21/2023.
International TTI: +7.75% above its M/A (prior close +7.60%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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