Market Tensions Rise: Inflation, Interest Rates & Energy Prices
march 17 2024, Update
Let’s start with some key indicators for the week:
SP500: -0.06% (indecisive)
Nasdaq: -0.7% (negative)
RSP: -0.66% (negative)
Brent (OIL): +3.97% (negative for inflation)
TNX (10-year yield): +5.26% (deteriorating)
Inflation Nowcast for March: +3.33% (deteriorating)
GDP Nowcast for Q1 2024: +2.3% (deteriorating from 2.5%)
Last week the CPI came hotter than expected at 3.17% YoY driven by rising energy prices, mostly. Unfortunately, oil prices are going up right now so inflation expectations are on the rise. That’s why we got a significant increase in the 10-year yield ($TNX).
This is a classic mix that is bad for growth stocks and real estate. Nothing to be too alarmed about just yet.
The SP500 is about 7% for the year and the Nasdaq is about 26% from the October 2023 lows, so a pause or pullback would be more than normal.
The mix in front of us suggests that at the FED meeting next week most likely we won’t hear dovish comments and expectations of rate cuts will be pushed further ahead. With energy prices on the rise, we have the perfect mix to allow the market to start correcting.
Looking at my scorecard on the daily Nasdaq chart, the index moved from 100/100 to 90/100 to 63/100:
In this environment, the best course is to stay defensive and be patient. The Nasdaq is right around the 21-day EMA (red line below). Let’s see if it can hold there or if it will visit the 50-day EMA (green line).
Sectors
Looking at my selection of ETFs to gauge the best sectors/industries, over the last month, Gold and Energy have been surging, which speaks to inflation fears and rising energy prices.
PORTFOLIOS
10X LARGE CAP MOMENTUM POT
I updated my stop loss levels. I might be close to cash out from SMCI.
10X SMALL CAP MOMENTUM POT
I was stopped from NVMI 0.00%↑ for a +14% gain. I raised my stop loss levels as shown in the table below.
I am not adding anything this week. Let’s see how it goes.
WATCHLIST (link)
The most interesting names I could find from my list are: TPL 0.00%↑REPX 0.00%↑ VTRU 0.00%↑ AFYA 0.00%↑ LYV 0.00%↑
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.