Market Highs and Fed Surprises: Navigating the Economic Ups and Downs with My Momentum Plays

December 17th, 2023 Update

[I asked ChatGPT to rewrite my post this week in a style I like. Let me know if you like the experiment]

Last week? Oh man, it was like the financial world's version of a season finale. The FED Governor, you know, the big boss of U.S. money stuff, finally spilled the beans after that nail-biting CPI report.

So here's the scoop: Jerome Powell, the head honcho at the Federal Reserve, comes out and says, "Hey, we're keeping the federal funds rate steady at 5.25-5.50%." But wait, there's a twist! He's also eyeing three rate cuts in 2024. Yeah, you heard that right. But, and it's a big but, this is only if inflation decides to play nice and cool down.

But Powell, he's a cautious guy. He's like that friend who won't jump into the pool until he's dipped a toe in. He's not ruling out more rate hikes if they're needed to hit that elusive 2% inflation target. He's seen some progress in cooling inflation, but let's be real, it's still hotter than a summer day in Death Valley.

The U.S. economy is flexing its muscles, and the job market is tighter than a drum. Powell's thinking, "Maybe we need to make borrowing a bit tougher to keep inflation in check." He's heard the market chatter about rate cuts coming as soon as next spring, but he's standing firm, keeping his options open.

Now, here's the catch-22: If the economic data comes in too strong, we might need higher rates or stick with the current ones for longer. But if the data's too weak, we could be staring down the barrel of a nasty recession.

Meanwhile, the market's like a kid on a sugar high, climbing higher and higher. The Equal Weight SP500? It's breaking out of its box, the one I've been watching like a hawk for months. And get this: it's doing it on some serious volume, showing that there's a real hunger for equities out there. It's even outpacing the regular SP500, with small and mid-caps joining the party.

Unless we veer off into "too bad" or "too good" economic data territory, I'm betting this rally keeps rolling.

Let's talk key data:

The 10-year treasury yield? It's dipped below 4%. It's been on a downhill ride lately, and I don't see it dropping much more. But we want it stable, not flipping the script and heading back up. As long as inflation and oil prices keep their cool, so should the 10-year yield.

Oil prices? They're finding their footing, nothing to lose sleep over.

M2 money supply? It's shrinking, and that's not great news. It's like the puppet master pulling the strings on credit, interest rates, and the looming shadow of a recession.

Now, onto my momentum portfolios:

10X LARGE CAPS MOMENTUM POT

Last week was action-packed. Both [SMCI 0.00%↑ and SYM 0.00%↑ triggered their STOP BUY orders. Here's the current look of my portfolio:

PDD 0.00%↑ is up a whopping 40% since I jumped in.

SMCI 0.00%↑ is showing promise, already up over 9% in just four trading days.

Overall, my portfolio's back in the black, though it's still trailing behind the SP500.

I've tweaked my Stop Losses.

10X SMALL CAPS MOMENTUM POT

I'm hitting a pause on buying this week. The portfolio's looking fit and trim, thanks to ML 0.00%↑ (MoneyLion), which leaped up 12% for the week. I'm sitting pretty with gains of 111% and 150% in each position. STNE 0.00%↑ and MIRM 0.00%↑ are also basking in the green, and their charts are looking as good as a fresh cup of morning coffee. The total ROI? A stunning 48%, leaving the SP500 in the dust by over 30%. I've updated my Stop Losses.

That's the word from the street this week. Let's wait and see if the market decides to take a breather or keeps sprinting ahead after several weeks of relentless climbing.

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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.