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Market Direction Model - Model switches to CASH/NEUTRAL on March 11, 2024

Model switches to CASH/NEUTRAL. Rates will likely remain higher for longer but liquidity via stealth QE will remain an important factor in guiding markets potentially higher so will be closely monitored. Currently, global liquidity is in an uptrend once again (yellow line). Since the BTFP was launched in mid-March 2023, major stock market indices have been resistant to downtrends even when global liquidity was in a downtrend such as from April to September 2023. Much FOMO froth exists which can push the uptrend also higher for longer than expected while utility from AI is unprecedented in terms of the impact it is having on the profitability of companies.

However, the bank term funding program (BTFP) ends today. Going forward, this is likely to increase banks' borrowing costs, meaning their profit margins will fall. They might react with higher lending rates or by making less credit available to customers, potentially weakening the economy.

AAII Sentiment survey had another peak at 51.7% as of last Wednesday. It comes out with new data each Wednesday.

We also had a high volume reversal on market leader NVDA after a semi-climactic move higher while a number of AI-meme stocks that have been hit prior to Friday. Advanced Micro Devices (AMD), Arm Holdings (ARM), and Super Micro Computer (SMCI) among others also all sold off hard on Friday. Both the S&P 500 and NASDAQ Composite had outside reversals on higher volume Friday.

The number of distribution days on the NASDAQ Composite have clustered over the last rolling 20-day period which put the model on a sell signal standby on Fri. Now that it has broken below the low of Fri, a sell signal is in effect. 
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.
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