Inflation At 3.3% Isn't Scary Inflation
It's likely the Fed-Shredding of risk assets is ending now.
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Look At The Actual Market In Front Of You
Recency bias is a terrible thing in investing and trading. Not even recency, sometimes. There are people still worried about the dot-com crisis, the mortgage crisis, the Euro crisis, probably the Vietnam War crisis, and any other maelstroms of which you may recall. As 2022 took hold, there were folks who remained bulled up 2021-style. And in 2023 there are folks who think that Fed policy and a recession are going to crush equities.
Opinions are all very interesting in securities markets - we all have them, it’s unavoidable - but they are irrelevant. The only thing that matters is what the market is actually doing. And the only actual guide to that is the market itself.
Daily in this Market Insight service we publish short- and long-term charts covering all four major US equity indices - the S&P500, the Nasdaq, the Dow Jones and the Russell 2000. We use ETFs for the long term charts and futures for the short term charts. The purpose of which is to give you the technical performance and potential next steps that each of the indices can take.
We use these charts in our own investing and trading work in staff personal accounts here at Cestrian. So they aren’t just dashed off and posted - there’s a wall of work goes into them and we review them constantly all through the day and the week.
As our Premium and Pro members can attest we’ve been calling bull market since mid Q4 last year; in October each of the indices had put in technical lows which looked convincing as bottoms, and as those lows were subsequently tested, retested, and failed to break, our confidence in the bullish outlook has grown. That’s looking medium-long term. We’ve also highlighted many short term long and short opportunities in the indices.
The inflation print today was important, we think. 3.3, 3.4%? That’s not scary inflation. If you’re over 12 years old? You think that’s fairly modest inflation. And so it’s likely that the Fed will now back off from shredding risk assets, allowing the market to continue to move up.
Below are our usual charts. If you’ve yet to sign up for Premium or Pro membership here, don’t worry, you didn’t miss the boat. There’s always another opportunity if you watch the actual market (as opposed to develop a theory of the market). You can sign up below.