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The FED Strikes (back)

PUBLISHED Nov 6, 2022, 2:03:41 AM        SHARE

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imgTom Hamilton

November 4, 2022 - In the week leading up to the Fed announcement last Wednesday the markets we’re thinking (i.e. hoping) for some indications of a slowing interest rate increase. Maybe ½% or at least some indication that the rates were approaching a peak. That really didn’t happen. Just a few “maybe in the future we’ll consider slowing the rate of increases”, then another ¾% increase. This has been a steepest / fastest increase in FED funds rates ever in our history and it has the markets spooked. We’ll have to wait until December to see IF there is some moderation. In the meantime the markets remain concerned about interest rates and their effect on a possible recession. It’s looking more likely.

Not much is going to happen until after the midterm elections have been called and that may take weeks, if not longer. I see us in a range bound market between 11230 (top) and 10093 (bottom) on the NASDAQ Composite Index. Right now it seems that there is more potential to go down than up. We’re going to need to see some light at the end of the tunnel before prices can break (and stay) higher.

Folks wonder why I nearly always show the Sector Strength table. It’s important in performing a ‘Top Down Market Analysis’. These are the sectors / industries that are performing best and that’s where we need to consider taking or holding positions. The idea is to “fish where the fish are” and not to cast a broad net everywhere. The bottom line is to minimize risk and try to put the “wind to our back”. It’s a focused part of trend following in an attempt to follow the bigger, long term investors.

The week coming up will be interesting to see just how strong or weak the markets are as the election results and the fallout is relieved to us. It’s a good time to be heavy in Cash IMHO. Have a good week and VOTE! … Tom …

Price chart by MetaStock; table by www.HighGrowthStock.com. Used with permission.



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