Your Money University

The only number that came out remotely good was PPI excluding Food, Energy & Trade Services year-over-year.  It wasn’t that long ago that the Fed reduced rate hikes to 0.25 basis points, but now Cleveland Fed President Mester said she saw a compelling case for a +0.50 basis point rate hike.   And now the dot plot of the Fed Funds rate will probably edge above 5% before all is said and done.  But is this news really affecting the market? Even though the market sold off yesterday - the S&P 500 (SPY) lost over 1% -  we’re still holding the long-term trend that started before 2023.  Sure, we need a higher high soon, but right now we’re still holding the trend line. If we zoom out to the weekly chart, we can see that we’re still in the uptrend that started in October of last year.  I’m looking for the 400 level to hold (4000 on SPX).  That’s only about 2% away from current levels. And if we go out even further to the monthly chart, we can see a simi...

  buyers are becoming increasingly aggressive as prices advance. When we look at how many stocks are seeing bullish momentum readings we are really analyzing the breadth of momentum for the broader market. This chart shows the highest percentage of NYSE stocks achieving overbought readings since spring 2020. If you can remember, back then, it was a great time to buy stocks. These kinds of breadth thrusts tell us that buyers are becoming increasingly aggressive as prices advance. More importantly, they tend to occur in the early stages of new bull markets...

  February Hangover . The November through January period is historically the most bullish 3 months of the year. And then comes the February Hangover. We're in the middle of that right now. Look at the average performance of every February going back to 1950: And remember, this is the most bullish quarter of the 4-year presidential cycle. Of the 16 quarters in the entire cycle, the one we're in is historically the most bullish.

  Do we have the will to do it? Leaders of foreign countries have solved fiscal crises -- witness Sweden in 1992, and Canada in 1995. Sweden even solved its Social Security problem through privatization. Why can’t the United States get its act together? The chart below shows how the Federal debt is growing hyperbolically. You can watch the federal debt grow every second by clicking  here . It is mesmerizing. The Fed's 'Wrecking Ball' [There's Only One Way To Dodge It] According to  Top 20 Living Economist  Dr. Mark Skousen... The Federal Reserve's moves are about to get even more dangerous... Forcing everyday investors to make panic-fueled decisions. To learn all about the Fed's "wrecking ball" -- and what Dr. Skousen is doing with his own personal investments --  click here now. 'What, me worry?' In response to the debt issue, let me first refer to economist American “Austrian” economist  Murray Rothbard,  who wrote the following in his mammot...

What happens in January matters for the rest of the year .   Today, stocks are in a clear uptrend. Take a look... You can see stocks' incredible performance since the October low. And you can see their huge January returns as well. Stocks have finally gained some upward momentum for the first time since the start of the bear market. That's good news for investors in the months ahead... especially since last month was so strong. You can see it in the table below. Going back to 1950, it shows what January performance means for stock returns in the months that follow... Over all periods, stocks have typically jumped 6.8% in the final 11 months of the year. And the market has moved higher 75% of the time. What happens in January has a massive effect on those returns, though... A positive return in January led to 11.3% gains over the rest of the year. And the win rate jumped to 86%. Meanwhile, if January was a loser, the rest of the year was barely in the green, rising just 0.7%... ...

Overbought BMI doesn’t guarantee an imminent pullback I also programmed my system to calculate what I call the Big Money Index, or BMI for short. It is the 25-day moving average of unusually big buys and sells for stocks and ETFs. The Big Money players are mostly hedge funds and other institutional players who account for 70% to 90% of all trading volume most days. Just last week, the BMI popped above 80, which put it in overbought territory for the first time since last August. Both the BMI and the  SPDR S&P 500 ETF Trust (SPY)  sold off – before rebounding and surging higher in October. I want to be very clear that an overbought BMI doesn’t guarantee an imminent pullback. In 2020, as the markets and economy were rallying after the COVID-19 shutdown, the BMI stayed up in overbought territory for nearly three months. And yet, there was a lot of money to be made in that time.

 Soft or Hard Landing for markets Let's see if the charts can guide us to a landing we can walk away from.   GDP is no longer cleared for landing: A spate of better-than-expected economic data has the Atlanta Fed’s forecast for Q1 GDP growth up to 2.2%. That’s a long way above the Wall Street consensus of -0.2%.   Wages are still coming in hot: The 6.1% wage growth reported this week suggests we’re not yet ready to land this thing. But a significant turn lower in the hottest sub-category (job switcher) may keep us from overheating.   Employment is showing no signs of cooling off: At 196,000, this week’s initial jobless claims are less than half what you’d normally see at the start of a recession.   Employers may be hoarding employees:   Construction workers, for example, are no easier to find than before mortgage rates doubled and housing sales cratered.    Housing tailwind? With 30-year mortgage rates back down to 6.1%, we’re interested in buying...