- Moving the market
This morning, the markets received a significant boost, with all indexes advancing broadly as inflation fears seemed to dissipate. The latest Consumer Price Index (CPI) report revealed that core inflation unexpectedly slowed in December. Major banks also kicked off the earnings season with impressive results, further fueled by a massive short squeeze.
December’s CPI showed that core inflation, which excludes food and energy, rose by 3.2%. This was slightly lower than the previous month and below the estimated 3.3%. However, the month-over-month headline inflation number came in just above the 0.3% forecast.
Traders were relieved by yesterday’s Producer Price Index (PPI) report and today’s CPI report, concluding that any additional rate hikes by the Federal Reserve are now off the table, a sentiment that some market participants had already priced in.
Bond yields retreated sharply, with the 10-year yield, which had been on a relentless upward trend since the Fed lowered rates, reversing course and dropping 14 basis points to close the session at 4.66%.
The fourth-quarter earnings season began with major banks like JP Morgan, Goldman Sachs, Wells Fargo, and Citibank all beating expectations. Bank earnings are crucial as the financial sector is closely tied to the general economy.
The mega-cap sector surged, recouping Friday’s losses, with the Nasdaq experiencing its best day since early November. The dollar closed lower after fluctuating wildly throughout the day.
Meanwhile, Bitcoin surged back above $100,000, and gold rallied to Monday’s highs, joined by crude oil, which broke above $80 for the first time since August.
Despite these positive developments, inflation remains a concern, raising the question in my mind: Does this exuberant rebound have any legs to stand on?
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)
Today, the stock market underwent a significant rally, driven by a softer-than-expected Consumer Price Index (CPI) reading. This unexpected data release triggered automated trading algorithms, propelling the major indexes to substantial gains.
Adding to the positive momentum, initial earnings reports from major banks exceeded expectations, further fueling a huge short squeeze.
Our TTIs also participated in the upward movement, contributing to the overall market advance.
This is how we closed 01/15/2025:
Domestic TTI: +3.55% above its M/A (prior close +2.56%)—Buy signal effective 11/21/2023.
International TTI: +1.57% above its M/A (prior close +0.24%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
———————————————————-
WOULD YOU LIKE TO HAVE YOUR INVESTMENTS PROFESSIONALLY MANAGED?
Do you have the time to follow our investment plans yourself? If you are a busy professional who would like to have his portfolio managed using our methodology, please contact me directly to get more details.
Contact Ulli