Markets Hold Steady Awaiting Powell’s Testimony And Upcoming Inflation Data

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[Chart courtesy of]

  1. Moving the markets

The S&P 500 and Nasdaq kept inching higher with traders trying to figure out the true meaning behind Powell’s prepared remarks. He opined that keeping interest rates elevated for too long could risk further economic growth, which Wall Street took as a hint that a less restrictive policy might be on the horizon.

On the other hand, nothing the Fed head ever says is clear, as he followed up with comments that “reducing policy restraint too late or too little could unduly weaken economic activity and employment,” and “more good data would strengthen our confidence that inflation is moving toward 2 percent.”

For sure, this was good enough to keep the bullish sentiment going, so the major indexes, except for the Dow, kept the rally alive, although the gains were modest. Again, it’s worth noting that the current upswing is not broad based and has been predominantly driven by the tech sector.

Powell will continue his testimony before Congress on Wednesday ahead of the release of the CPI and PPI inflation data. I am convinced that he will not send any signals as to the possible timing of this much desired and talked about potential rate cut.

Bond yields went nowhere, but Bitcoin found some footing and surged back above $58k. The dollar remained in its recent narrow trading range, as gold followed suit but eked out a green close, while crude oil not only lost its upward momentum but also its $82 price level.   

I expect tomorrow to be another calm trading day, because traders are all focused on Powell’s next talk and the release of the CPI number on Thursday.  

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)

Going nowhere best describes today’s market action, despite the S&P 500 and Nasdaq eking out a green close.

However, the advance was narrow and focused on only a few stocks, so our TTIs went the other way and ended down a fraction.

This is how we closed 07/09/2024:

Domestic TTI: +4.51% above its M/A (prior close +4.69%)—Buy signal effective 11/21/2023.

International TTI: +7.08% above its M/A (prior close +7.34%)—Buy signal effective 11/21/2023.

All linked charts above are courtesy of Bloomberg via ZeroHedge.



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