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- Moving the market
After yesterday’s comeback rally, equities slipped this morning ahead of the Federal Reserve’s latest policy decision on interest rates, expected after 11 am PST.
The odds were nearly 100% that the Central Bank will maintain rates within the target range of 4.25% to 4.5%. As usual, traders are primarily focused on Chairman Powell’s comments, especially since this is his first press conference in President Trump’s second term.
The Fed met Wall Street expectations by pausing rates as anticipated. However, Powell’s statement was somewhat more hawkish compared to last month, particularly with these notable points:
**FED: UNEMPLOYMENT ‘STABILIZED,’ LABOR MARKET REMAINS ‘SOLID’**
**FED: REMOVES REFERENCE TO INFLATION MAKING PROGRESS TOWARD GOAL**
As ZeroHedge pointed out, a strong labor market combined with no progress on inflation does not suggest rate cuts anytime soon.
The major indexes reacted negatively, reversing some of yesterday’s gains. The Staples and Utilities sectors benefited, while Technology and Real Estate were the biggest losers.
Nvidia, after recovering yesterday, took another 4% hit. Mega-Cap tech stocks initially dropped but managed to cut some early losses. However, their performance ahead of this afternoon’s earnings reports from META, MSFT, and TSLA remains to be seen.
Bond yields surged initially but ended the session only slightly higher, with the 10-year yield swinging wildly intra-day. Rate-cut expectations tumbled, the dollar initially jumped then fell, gold slipped, but Bitcoin surged towards $105k, erasing Monday’s losses.
With President Trump calling for lower rates and the Fed maintaining its stance, will there be more contention ahead?
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 stock market saw a mixed performance today. The Dow was the only major index to open in positive territory. In contrast, the S&P 500 and Nasdaq both started the day in the red and struggled to recover throughout the trading session.
Despite their efforts, neither index managed to climb back into positive territory, ultimately resulting in all three major indices giving back some of the gains they had achieved the previous day.
In terms of our proprietary TTIs, the results were also mixed. The international TTI showed a slight advance, indicating some positive movement in global markets. However, the domestic TTI experienced a minor decline, reflecting a small dip in the performance of the domestic market.
This is how we closed 01/29/2025:
Domestic TTI: +4.64% above its M/A (prior close +4.98%)—Buy signal effective 11/21/2023.
International TTI: +4.82% above its M/A (prior close +4.60%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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