ETF Tracker StatSheet
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FED’S CAUTIOUS STANCE HALTS POST-ELECTION RALLY
- Moving the market
The major indexes opened lower as the post-election rally came to an abrupt halt following Fed Chair Powell’s comments yesterday that he is “in no hurry” to continue cutting rates.
This statement put significant pressure on equities, casting doubt on the foundation of the recent market surge and accelerating the trend reversal seen early on.
It appears that last week’s rate cut may be the final one for this year, as hopes for another cut in December have dissipated.
Equities surrendered some of last week’s substantial gains, but traders remain optimistic that this pullback will be limited due to strong seasonal trends, as I highlighted in yesterday’s chart.
The eagerly anticipated retail sales report showed a 0.4% increase in October, surpassing the 0.3% forecast. However, this increase reflects higher prices rather than increased consumer activity, indicating that consumers are paying more for the same goods due to inflation.
The “good news” of improved US macroeconomic data turned into “bad news” as both inflation and growth surged, which is not the kind of data the Fed prefers to see. This development has significantly reduced expectations for further rate cuts.
For the week, energy and financials were the only sectors to end in the green, while healthcare performed the worst. Mega-cap stocks lost all their post-election gains, as noted by ZH.
The most shorted stocks underwent a round trip during the first half of November, while bonds continued their trend towards higher yields, with the 10-year yield touching 4.5% before pulling back at the close.
Gold also dropped, experiencing its worst week since June 2021, falling to two-month lows due to the dollar’s strength, which was bolstered by higher yields.
Meanwhile, Bitcoin had its best two-week run since March, hitting new records and maintaining its $91k level, making it the top performer with a gain of over 36% in the last 30 days.
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)
Yesterday, the Federal Reserve’s announcement that they are not in a rush to cut interest rates further resonated strongly with traders.
This cautious stance led to a significant sell-off in the markets, with the Nasdaq suffering the most substantial losses.
Despite this downturn, our TTIs also saw a pullback but continue to maintain a bullish outlook.
This is how we closed 11/15/2024:
Domestic TTI: +7.23% above its M/A (prior close +8.37%)—Buy signal effective 11/21/2023.
International TTI: +3.30% above its M/A (prior close +3.64%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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