FED In It For The Long Haul

PUBLISHED Dec 17, 2022, 8:01:08 PM        SHARE

img
imgTom Hamilton

**December 16, 2022 - ** The FED raised rates ½% as expected and the market initially thought that the end of rising rates was near, but Chairman Powell’s press briefing but that “to bed” quickly. He stated that elevated rates will be here for “awhile”, likely well into 2023 before there will be a possible lowering. The markets didn’t care for that and reverted back down.

How much lower? That all depends. We’re in the final stages of tax selling and we’ll need to see the options structure after Fridays “quad witching” of futures and options. Going into Friday the amount of Puts and Calls was about equal, with large option volumes at strike prices just above the closing prices on Friday. Did these options get “rolled forward” into next month or were they closed out? We’ll get an indication of that on Monday. But the call buyers got burned on Friday (strike prices above the Friday close).

In reality from an economic stand point not much has changed. It’s going to take months to tame inflation and we’ll very likely get another ¾% to full point increase in 2023. Recession is becoming more of a reality. Let’s keep an eye on the Bond market and small cap index for clues as to an indication of whether big money is actually getting more optimistic. Bond prices rising (like they have been) and the US Dollar falling is Bullish; will that continue? The opposite is Bearish.

The chart shows that prices are back to the mid-June, 2022 levels (on the way down) and the mid-July, 2021 levels (on the way up). Sure does make a case for active investing.

Next week will be slow with low trading volumes, but that can breed volatility, so be careful. I’m likely not going to be very active, but areas I like are in Pharma / Biotech and Healthcare. These are more defensive but can participate IF the market price structure improves. Have a Good Week & Take Care. …... Tom …... Price chart by MetaStock; & table by www.HighGrowthStock.com. Used with permission.

I/we have a position in an asset mentioned



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