- Moving the market
The major indexes surged right after the opening bell, driven by growing trader confidence that a recession could be avoided due to better-than-expected retail sales. The July retail numbers reportedly increased by 1%, significantly surpassing the forecast of 0.3%, while volatile jobless claims fell for the week.
However, revisions are likely on the horizon, as ZH noted that for the eighth month in the past year, the previous month’s data was revised lower. This highlights the transient nature of headline news that does nothing but appease the markets.
For now, this data has acted as a catalyst for equities, especially after concerns about a slowing economy were heightened by July’s disappointing jobs report from August 2nd. Nonetheless, economic issues remain unresolved, with the US Surprise Index heading towards its 2024 lows. Currently, the major indexes have managed to erase all of August’s losses, with the S&P 500 now less than 3% below its record high.
Positive data points like these not only alleviate recession fears but also reduce pressure on the Federal Reserve to cut rates aggressively. However, when considering the broader picture of mass layoffs, record store closures, and declining real wages, the current upbeat numbers appear to be outliers and may be short-lived.
The continuation of this month’s short squeeze provided the necessary boost to ramp up equities, with the MAG 7 enjoying a winning streak for six consecutive sessions.
Bond yields spiked, as did the dollar, but gold experienced a rollercoaster ride and managed to close in the green. Bitcoin took a dive on news that the US government plans to sell some of its holdings, causing the cryptocurrency to drop towards $57k. Meanwhile, crude oil recovered from yesterday’s sell-off.
As ZH pointed out, while stocks are experiencing a “Goldilocks” environment, bond yields and rate-cut expectations have diverged, presenting a different picture that suggests a potential recession.
Who will be right?
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 market recorded a significant boost, primarily driven by retail sales numbers that exceeded expectations. This positive data steered the market’s direction, resulting in substantial gains across the major indexes. The Nasdaq emerged as the frontrunner, showcasing impressive performance.
Additionally, our TTI’s also participated in this upward trend, advancing notably alongside the broader market.
This is how we closed 08/15/2024:
Domestic TTI: +6.09% above its M/A (prior close +4.64%)—Buy signal effective 11/21/2023.
International TTI: +5.14% below its M/A (prior close +4.08%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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