Inflation numbers means good news for
the market.
The CPI (Core Producer Price Index) report came out yesterday and the results are that inflation pressure is subsiding. The market reacted very positively with another triple digit gain for the Dow. Why all the excitement? Lower inflation means the Fed may start putting on the breaks to these interest rate hikes.
Chart provided courtesy of www.decisionpoint.com
So what now? Has the S&P 500 come too far, too fast? Well the fact that pessimism is still high tells me there is a lot of money on the sidelines waiting to get into the market. The bears who have been betting against the market are going to get short squeezed. That means these traders are holding on to these "bets" that the market will go down. The more the market goes up, the more money they lose. I believe they are in a situation where they will have to cover, or buy back these shares of stock that they are short, which will continue to add fuel to the rally.
I know that sounds confusing but bottom line is we should see "buy the dip" type rallies each time the market shows any weakness, from those who are missing this rally. It should give it some staying power. As I mentioned the other day, I can see another 4 or 5 weeks of strength judging by the 1994 chart. That would bring us to the next Fed meeting.
Ever hear the term buy the rumor, sell the news? The market is now moving up on the rumor that the Fed could stop raising interest rates. If the Fed does give the all clear signal in their meeting in June, it may be too late to make any money. The herd will start buying and those of us invested already, may be ready to take some profits (sell the news).
The I fund finally had a big day. The dollar did pullback some so I believe I am just days away from getting out of the I fund completely.
Another short market comments. I'll let the market tell the story. Currently 65% C, 20% S, 15% I fund. Until next time...
The CPI (Core Producer Price Index) report came out yesterday and the results are that inflation pressure is subsiding. The market reacted very positively with another triple digit gain for the Dow. Why all the excitement? Lower inflation means the Fed may start putting on the breaks to these interest rate hikes.
Chart provided courtesy of www.decisionpoint.com
So what now? Has the S&P 500 come too far, too fast? Well the fact that pessimism is still high tells me there is a lot of money on the sidelines waiting to get into the market. The bears who have been betting against the market are going to get short squeezed. That means these traders are holding on to these "bets" that the market will go down. The more the market goes up, the more money they lose. I believe they are in a situation where they will have to cover, or buy back these shares of stock that they are short, which will continue to add fuel to the rally.
I know that sounds confusing but bottom line is we should see "buy the dip" type rallies each time the market shows any weakness, from those who are missing this rally. It should give it some staying power. As I mentioned the other day, I can see another 4 or 5 weeks of strength judging by the 1994 chart. That would bring us to the next Fed meeting.
Ever hear the term buy the rumor, sell the news? The market is now moving up on the rumor that the Fed could stop raising interest rates. If the Fed does give the all clear signal in their meeting in June, it may be too late to make any money. The herd will start buying and those of us invested already, may be ready to take some profits (sell the news).
The I fund finally had a big day. The dollar did pullback some so I believe I am just days away from getting out of the I fund completely.
Another short market comments. I'll let the market tell the story. Currently 65% C, 20% S, 15% I fund. Until next time...
Have questions? Visit our message board for answers.
Would you like to be on our
email alert
list?
We will send you an email when there is a change to our asset allocation
or market outlook. Input your email address in the form on the top
right of any page and you're in. Your email address will never be
given out.
Read our
privacy policy.
By signing up you agree to the TSP Talk
Terms of
Service. More details below **.
Like
what you're reading? Tell
a Friend
about us.