Major averages finished roughly breakeven Friday on mixed volume. The rise in bond yields has put a lid on the markets as they struggle to attempt an upside breakout. And while commodities and oil in particular have been bouncing, this perhaps can largely be attributed to the recent pullback in the dollar after its huge display of strength between July 2014 and March 2015, rather than a global economy that is turning the corner. Thus, the continued weakness in the global economy implies a continuation of quantitative easing across major central banks. Still, higher interest rates are a concern to investors as this may be a sign the Federal Reserve may be looking to raise rates sooner than later. But even if the Fed delays a rate hike, thus continuing with a flood of QE in the system, banking regulations have put restrictions on banks, requiring them to carry more cash as well as riskless securities, thus banks have less QE-capital to invest in the stock market to push it higher.
In addition to the above, prominent bond portfolio managers recently stated that bonds should be shorted as they believe rates will have to rise at some point which added further selling pressure to bonds as other institutions heeded the advice.
With all the cross currents noted above, it is no wonder the market has struggled to find direction. On those stocks that were actionable from last week, it has never been more imperative to take your profits when you have them and to quickly cut losses. Walking this "tightrope" certainly requires discipline and is an excellent environment for polishing up one's trading weaknesses.
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. ©2019 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.