In today’s market, investors are eagerly awaiting the Federal Reserve’s decision on interest rates. The chart of the SPDR S&P 500 ETF Trust (SPY) shows that the trendline is still intact, but there are two weekly dojis indicating indecision. The Fed faces a quandary as inflation remains higher than expected, the economy is stronger than anticipated, and financial conditions have eased.
The momo crowd is pressuring the Fed to cut rates, but the central bank must consider its dual mandate of price stability and maximum employment. If the Fed decides to keep rates high, the stock market may experience a pullback. On the other hand, if the Fed bows to pressure from the momo gurus, the rally could continue, potentially reaching new highs.
In the U.K., CPI data came in cooler than expected, which could have implications for U.S. data. Money flows are positive in Meta Platforms Inc and Tesla Inc, neutral in several other tech giants, and negative in Apple Inc. The momo crowd is buying stocks, while smart money is inactive.
In the commodities market, oil inventories showed a draw, but the momo crowd is selling oil. Bitcoin is range-bound, and gold and silver are seeing mixed activity. Investors should consider protection bands and adjust hedge levels to navigate market volatility.
For those holding a traditional 60/40 portfolio, it may be wise to focus on high-quality bonds with shorter durations. Tactical positioning with bond ETFs could be beneficial in the current market environment.
Overall, investors should stay informed and be prepared for potential market shifts based on the Fed’s decision and economic data. By staying flexible and adjusting strategies as needed, investors can navigate market uncertainties and capitalize on new opportunities.
