Inflation, Yields, and Portfolio Moves
November 20, 2023 Update
Here is my quick update for the week.
The most important news from last week was the better-than-expected inflation number that came at 3.2% instead of 3.3% expected.
I have been pointing out how inflation expectations play a big role in moving expectations about what the monetary policy could be. Also, inflation impacts short and long-term rates.
Let’s start looking at the 10-year treasury yield that keeps declining. See below.
If energy prices stay moderate, then inflation can keep its pace towards the 2% target from the FED.
In an environment where it looks more likely that the FED is done with rate hikes, the market responded well with another positive week. See below the equal-weight SP500:
We are well in the box again. Now let’s see what’s next. We are in a range-bound market which is very difficult to trade.
Looking at the Greed&Fear Index we are back to early signs of Greed and yet with some room before getting too greedy again:
Last, looking at sectors, it is clear that Technology keeps being the leading sector, while financials have been resilient, a good sign for the overall market. Consumer Discretionary had a good week, which indicates signs of optimism from market operators.
My take in a nutshell:
Inflation seems to be getting under control (good)
Energy is always difficult to predict and could change the picture rapidly, also because of geopolitical tensions
Now the focus will be recession vs soft landing again: too harsh negative data (for example: jobless claims or industrial production or consumer demand) can send the market into panic mode, while some “soft” data about a slowing economy would be ideal
Too good data could also be “bad” as it might re-ignite inflation and the “higher for longer” rates narrative.
Seasonality says we might get a good “end of the year” rally started 3 weeks ago.
MY PORTFOLIOS
10X LARGE CAP MOMENTUM POT
Both PDD 0.00%↑ and DKNG 0.00%↑ are doing well in the POT. I am not touching it this week.
10X SMALL CAP MOMENTUM POT
Here ML 0.00%↑ is working very well with an average gain of $44% in a few weeks:
I have raised my Stop Loss to $23.9. ML is very volatile so I don’t want to be kicked out by volatility. That’s why my SL is set at about 30% from the current price.
New Positions:
I’m creating a STOP BUY order for 60 shares of MIRM 0.00%↑ if it touches $32.5 and, in case, my initial Stop Loss will be at $27.95
I’m creating a STOP BUY order for 140 shares of STNE 0.00%↑ if it touches $14.2 and, in case, my initial Stop Loss will be at $11.9
Both are very high-growth companies and undervalued while showing signs of accumulation.
That’s all for the week.
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.