US stock market is faced with a new FED.....when Interest rate going to go UP
First Interest rate was supposed to go UP in 2024
Last Wednesday...It was moved UP to 2nd half of 2023
2 days later on Friday It was implied some times in 2022
SO market took a hit on Friday...too fast too soon in 2022
IF they talk back to 2023 then market should rally
Internals of the market is downright negative...
TAN is the strongest sector with an RSI of 59.21...but it is below 200 DMA
Nasdaq is holding UP well in 2nd strongest position with RSI of 57.60, Nasdaq is above 50 DMA
SOX is barely above 50 DMA with an RSI of 49.63
S&P 500 is below 50 DMA with an RSI of 43.37
DOW below 50 DMA with an RSI of 28.72
XLB material sector is below 50 DMA and weakest RSI @ 27.00
Russell 2000 is below 50 DMA and RSI @ 42.53
XLE energy sector above 50 DMA barely with an RSI of 42.35
JETS below 50 DMA and RSI of 36.05
IF you look @ above RSI and 50 DMA scenario, It Is very easy to see that we are very oversold...thus a rally is overdue....
IF a rally is overdue, then It Is very difficult to be narrow focused on any sector, being well diversified will get you some participation in an " oversold bounce "
I think Fed has showed its real hand about early hike in Fed Funds rate.
Job picture should improve rapidly as we are almost back to normal operation starting this week.
Market will lift all boats as we go forward......
SO...It Is time to let Fed worry about exact timing of hike and we should focus on stock selection....
YES everything is back to bargain level and will move fast towards mean....
Let us build a portfolio where growth may be fastest, so look @ Fundamental analysis.
Technicals are mostly horrible..so leave that one alone for now....
Good luck with your own analysis and comfort level.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hi Saleem,
Last week: +1.73% (YTD: +26.09%)
Notable Leaders: TZA PSNL ESTC BMBL UPST
Notable Laggards: GMBL BHVN AGCO DDD GRWG
In a pullback week for markets, my large TZA position surged and some other tech stocks performed well also. You very rightly point out that the market is highly oversold at this time, so a bounce is probably likely for now. I think the real question is the direction after the bounce as the topping pattern in the DJIA is pronounced whereas other markets appear to be just resting. This may tell us that we get back to a market eventually where technology and disruption rule and they create a disinflationary force, very much like the market we've had in the prior 12 years since the 2009 lows. Unfortunately, there might be somewhat lasting higher prices in some markets like food and energy, so it's possible we see more of a stagflation economy instead, which would be a worst case scenario. Ultimately, I think a diversified stock picking approach will still outperform.
Holdings: TZA (23.7%), BHVN DDD BMBL ELY AGCO GRWG UPST, cash 30.7%
Stocktrader
Hi Stocktrader,
Last week Down 5.74%
YTD UP 6.25%
Saleem
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