Model switches to CASH/NEUTRAL. The recent straight up from bottom market action is due to a confluence of events, first and foremost with Fed chair Powell saying rates may have reached peak levels suggesting no more rate hikes. Of course, this is data dependent. Nevertheless, a fierce short covering rally ensued. With today's CPI, we have more evidence of what the Fed construes as moderating or lower inflation rates which boosts the odds of no more hikes while increasing the odds of the first rate reduction sooner than later. CME FedWatch currently predicts no more hikes with the first cut in May 2024.
If history is any rough guide, on December 24, 2018, we had our first Xmas crash where markets continued to nosedive. The Fed shortly after said they would stop hiking rates after having hiked 9 consecutive times. Markets rallied in the ensuing months.
Market Direction Model - Model switches to CASH/NEUTRAL on November 14, 2023
| Published: | 14 Nov 2023 11:13 ET |
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