There was really nothing but good news up and down Wall Street this past week. The Federal Reserve decided to pause their interest rate hikes this week and this had not only a positive effect on the stock market but a bullish one as well.
Although the current inflation rate stands at 4% currently, double the stated rate the Fed is looking for (2%) enough signals allowed the Fed to keep the current rate as is (5 %). As we wrote last week, the Fed, we observed, was comfortable with pausing a rate hike and instead would keep open the likelihood of a hike in July.
Applications for new mortgages jumped ahead 7.2% which is the largest in three months according to the Mortgage Bankers Association. The current national average on a 30-year mortgage is 6.77%.
Again, that good news is bad news/bad news is good news scenario played a role in the market upturn. Wall Street expected 249,000 Americans to file for unemployment however the number actually jumped to 262,000. This signals that corporate America is beginning to feel the pain of the upswing in interest rates over the past 15 months. Look for higher numbers of workers filing for unemployment over the coming weeks. For investors this is good news. Crazy we know!
According to the University of Michigan’s data consumer sentiment increased to 63.9 in June which has not been this high since February 9 when the market posted positive year-to-date returns. Much of this comfort resulted in the debt ceiling being resolved as well as positive inflation numbers.
As we’ve pointed out over the past few weeks, the Small Cap stocks needed to show positive growth in order not only for the markets to increase but to sustain that growth and that has now taken place.
The Cboe Volatility Index (VIX) has moved lower to 13.54 which is a very positive figure, meaning investors are feeling even more confident that a Bull Market has begun. You’ll recall from our previous posts where we pointed out that the higher the number in the VIX the more worried investors are. The number 30 is dangerous and close to 40 signals an all-out panic.
NADAQ continues its bull run posting it’s eight consecutive weekly gains. This has not happened since early 2019 according to Dow Jones Market Data.
As the current stock market rally continues it is also broadening out into other areas beyond tech stocks and this is a positive indicator signaling that the Street thinks we may be able to avoid any meaningful economic slowdown.
The S&P 500 is now over 20% from its October lows, however Treasuries continue to worry us. Week after week we point out the current status of Treasury interest rates and this continues to show an Inverted pattern where short-term Treasuries pay higher rates than long term Treasuries.
2-year Treasuries stand at 4.71%. 5-year Treasuries at 3.98% and 10-year Treasuries are at 3.76%. This is a concern for us and continues to bear watching. As we’ve pointed out in previous posts, Inverted Yield Curves signal a recession ahead.
For the week the S&P 500 closed at 4,409 up 2.58%. The DJIA closed at 34,299 up 1.25% for the week and the Nasdaq 13,689 up 3.25% for the week.
Our philosophy at GaneWisdom/Market Edge is one of technical analysis. We monitor a multitude of signals, indexes, charts as well as the trend and other related data that affect the markets. When the markets are showing strength, we signal the most opportune sectors to position your money. Conversely, when the markets are signaling weakness, we make suggestions for that as well. Our subscribers are up over 5 ½% from our inception in August 2022. Compared to the ‘Buy and Hold’ crowd who have just broken even these last few weeks, we are taking advantage of the market upswings without ‘making up’ anything.
Bad news sells as they say and at present there is no bad news to be had………At present!
Hopefully this rally will continue unabated for weeks to come but as in life things can’t always be bad, neither can they always be good. When (not if) the current market reverses we will signal those best alternatives as we’ve said above. Don’t bury your head in the sand and don’t buy the line that advises ‘to just hold on’. As we’ve seen over the past 15 months, doing so can cost you. Considerably.
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