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THE WEEKLY TOP 10
Table of Contents:
1) The Fed to let inflation run hot...which = higher LT interest rates...which = lower stock prices. (Pretty simple.)
1a) Following last year’s script..........And...the Fed knows higher inflation will hurt the broad stock market.
2) Having said this, the Fed’s goal is still to keep these moves gradual ones.
3) More examples of “forced selling”...that’s what happens in an extremely leveraged marketplace.
4) Treasury notes have become very oversold near-term. (Overbought in terms of yield.)
5) Support/resistance levels for the S&P 500, Nasdaq, and Russell 2000 indices.
6) With T-notes oversold, bank stock have become overbought...and due for a “breather.”
7) We’re seeing signs that the “tradable” pull-back in commodities is beginning.
8) The travel & leisure stocks have become very overbought. (New Covid Variants to cause problems?)
9) Quick comments & charts on Bitcoin, TSLA, Gold, and the ITB housing ETF.
10) Summary of our current stance.
Long (and only) Version:
1) Chairman Powell’s comments last week were dovish...and thus they were originally viewed as bullish for the stock market. However, the more important aspect of his comments was that he reiterated the Fed’s intention to let inflation run hot. That’s good for the economy, but it also means that the Fed will accept higher long-term interest rates...so it’s not so great for the stock market for the near/intermediate-term.
Chairman Powell’s comments in front of Congress last week were bullish for the economy, BUT they were not particularly bullish for the stock market. Even tough they’re willing to keep their stimulus programs in place for as long as is ...