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VoSI Focus List Review for the Week Ended February 10, 2023

Major market indexes spent the week correcting after steady uptrends in January. The pullback is perhaps necessary ahead of Tuesday's Consumer Price Index report and was well-contained on the chart of the S&P 500 Index. The index held support at its 20-day exponential moving average. 

But much of the bounce was due to short covering as it was the largest short squeeze since 2015. Prior major short squeezes such as in 2015 and 2021 always resulted in lower major averages over the ensuing weeks.

Further, a number of Fed members have said they are not seeing signs of a quick decline in inflation. The CME fed fund futures now predicts a terminal rate of 500-525 at minimum, or at least two more 25 bps rate hikes. Despite this, one Fed member said the markets seem to think inflation will cool faster than the Fed thinks. Food prices are likely to remain stubbornly high due to supply chain issues as well as soaring prices in wheat and fertilizer. 

Precious metals continue to correct. While silver dangles in mid-air as it looks set to test its 200-day moving average, the SPDR Gold Shares (GLD) held support at the 50-day moving average on Friday as volume declined to -49% below average. This is a typical voodoo type of pullback to the 50-day line that is buyable using the 50-dma as a tight selling guide.
Bitcoin ($BTCUSD) broke near-term support at its 20-dema on Thursday to trigger a short-sale entry at that point. We continue to expect more corrective action in $BTCUSD and would use any rally up into the 20-dema as a potential short-sale entry using the inverse ProShares Short Bitcoin Strategy ETF (BITI).
This Tuesday the latest Consumer Price Index report will be released. Expectations from the Cleveland Fed are for a 0.45% increase in month-over-month core CPI compared to 0.3% last month. There is little doubt that any surprises from the CPI will have a meaningful market effect. However, if it merely comes in as expected it would still imply reacceleration in month-over-month CPI. Thus any variety of market outcomes could occur on Tuesday, making it difficult to pound the table bullishly or bearishly until we see what the CPI reports brings.

The Market Direction Model (MDM) remains on a SELL signal.

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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