- Moving the markets
The Nasdaq Composite had another bad day on Thursday, dropping for the fifth time in a row — its worst run since last December.
Big tech stocks like Apple are not doing well this year, as investors are worried that they are too expensive and that the Fed might raise interest rates sooner than expected.
The economy, on the other hand, is doing fine, with strong job growth, low unemployment, and high service activity.
This boosted Treasury yields today, and made the market think that a rate hike in March is more likely. This pushed bond yields higher, with the 10-year breaking above its recent downtrend and touching 4% again but failing to close above it.
Stocks took a hit and the MAG7 (Microsoft, Amazon, Google, Facebook, Apple, Netflix, and Tesla) lost all their gains from last month. The Dow was the only index that managed to end slightly positive.
The Nasdaq and the Small Caps are down 3.5% this year, while the S&P is having its worst start since the 2008 crisis.
The dollar is on a roll, rising for the fifth day in a row, its best start to a year since 2005. Gold, however, recovered some of its recent losses and stayed above $2,040.
Financial conditions are getting tighter, which reminded ZeroHedge of what the Fed said in its minutes:
“Many participants remarked that an easing in financial conditions beyond what is appropriate could make it more difficult for the Committee to reach its inflation goal.”
Is the Fed trying to tell us that the market is too happy for its own good?
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 major indexes started the day with a slight rise, but soon fell under selling pressure and declined. The Dow ended flat, while the S&P and Nasdaq suffered small losses.
Our TTIs diverged, with the international one improving and the domestic one slipping a bit. However, the overall trend is still positive, and we continue to hold our positions.
This is how we closed 1/4/2024:
Domestic TTI: +6.80% above its M/A (prior close +6.97%)—Buy signal effective 11/21/2023.
International TTI: +6.49% above its M/A (prior close +6.15%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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