- Moving the markets
Today, Wall Street witnessed a rollercoaster ride as the major indexes initially surged in response to the Federal Reserve’s decision to keep interest rates unchanged. However, this early enthusiasm gave way to disappointment as the S&P 500 and Nasdaq reversed course and ended the day in negative territory.
Fed Chair Jerome Powell cited a “lack of further progress” in taming inflation as the reason for maintaining rates. Inflation remains stubbornly high, and the path ahead is uncertain. But the Fed did signal a gradual approach to tightening financial conditions by slowing the pace of quantitative tightening—allowing maturing bonds to roll off the balance sheet without reinvesting them.
Traders welcomed this measured approach, but elsewhere, stocks tied to artificial intelligence faced headwinds. Advanced Micro Devices, Super Micro Computer, and Nvidia all grappled with disappointing reports.
Shorted stocks experienced a massive squeeze, while bond yields dropped, the dollar fluctuated but gold surged back above its $2,300 level. Bitcoin got dragged down with stocks, and crude oil followed the same theme.
Fed head Powell elaborated on not seeing stagflation, but maybe he missed this chart from Bloomberg, which makes the current condition abundantly clear.
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)
Initially, the market responded positively to Powell’s announcement of leaving rates unchanged, but that optimism quickly turned into pessimism. Two out of the three major indexes plummeted into the red.
Our TTIs also experienced a rollercoaster ride and ultimately closed the session with a slight loss.
This is how we closed 5/01/2024:
Domestic TTI: +5.56% above its M/A (prior close +5.96%)—Buy signal effective 11/21/2023.
International TTI: +6.58% above its M/A (prior close +6.76%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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