Model switches to CASH/NEUTRAL.
The NASDAQ Composite has been trading in a choppy, sloppy manner since late November (the red bars are alert signals):
The number of cross currents has been material between C19, wages, unemployment, growth, and inflation thus it is best to go to the sidelines for now. Powell left room for a reversal of his decision to double the pace of the taper or put off a rate hike though if economic conditions show sufficient strength, a hike could come as early as March 2022. Meanwhile, some major central banks have started hiking rates including the 25 basis point hike by the Bank of England on Dec 16. Notably, most all members of the U.S. Federal Reserve are now hawkish, a change of tune from their position a couple months ago when Powell said inflation was transitory but then removed the word as he realized inflation was persistent and higher than expected. But a substantial amount of QE, while being tapered, along with the raising of the debt ceiling is still a tailwind to the stock market. At a $30 billion/mo reduction in QE, tapering should be complete by March. If the major averages don't stage a taper tantrum by then forcing Powell's hand once again, expect headwinds as it opens the opportunity for Powell to start hiking rates. Debt is too large at this stage for any meaningful rate increases to occur before the major averages undergo material corrections, ie, beyond -20%.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
