ETF Tracker StatSheet
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MARKETS REBOUND AMID INFLATION DATA AND LOOMING GOVERNMENT SHUTDOWN
- Moving the market
After a challenging week, during which the Dow plummeted by approximately 1,100 points in a single day, the major indexes managed to stabilize. They rebounded immediately after the opening and recovered some of the previous day’s losses.
This recovery was supported by the Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) index, which increased by “only” 2.4% year-over-year. This figure was slightly lower than expected, which seemed to reassure traders about the Fed’s stance on further rate cuts amid persistent inflation.
Such faint hopes often drive the bulls on Wall Street, despite ongoing concerns about inflation, especially in the context of rising debt and deficits. Additionally, the issue of government funding remains unresolved, with a partial shutdown set to begin tonight if no agreement is reached.
The US Economic Surprise Index fell for the fifth consecutive week, as noted by ZH, with both “soft” and “hard” data showing weakness. This prompted Chicago Fed’s Goolsbee to remark, “I’ve been saying that the overall trend is that inflation is way down.”
A significant short squeeze provided a boost to equities, with Mega-Caps also recovering and returning to their unchanged levels for the week. Bond yields rose sharply, with the 10-year yield climbing for the second consecutive week, ending at 4.53%.
The dollar strengthened for the third week in a row, Bitcoin rebounded but had its worst week since September, and gold, although lower for the week, rallied nicely today.
With the midnight deadline rapidly approaching, the looming government shutdown remains a significant concern, making me ponder how the markets will react on Monday, should it occur.
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 sharp sell-off experienced yesterday seemed to be an overreaction, as bargain hunters quickly stepped in, driving the major indexes to substantial gains.
This positive momentum also benefited our TTIs, which moved further away from their respective trend lines.
As a result, the risk of an imminent sell signal has been significantly reduced.
This is how we closed 12/20/2024:
Domestic TTI: +3.07% above its M/A (prior close +1.82%)—Buy signal effective 11/21/2023.
International TTI: +0.76% above its M/A (prior close +0.30%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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