1/30/2019 – A positive day with the Dow Jones up 434 points (+1.77%) and the Nasdaq up 154 points (+2.20%)
As we have been saying, the stock market remains at an incredibly important juncture. Things are about to accelerate in an unexpected way. If you would like to find out what happens next, based on our timing and mathematical work, in both price and time, please Click Here.
Up, up and away?
At least that appears to be the case for the market bulls who celebrated yet another victory after the FED’s Chair James Powell decided to turn himself into a Trump’s doormat.
Powell Now a Fully-Trained Puppy Happy to Please Master Market
“Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
“Patient” Fed Capitulates To Market, Surprises With Unexpected Balance Sheet Unwind Clarification
So, did The Fed deliver?
They appeared to do so – folding entirely to the market –
- Fed removes reference to further gradual rate increases
- Fed says it plans to continue with current floor approach
- Fed says it’s prepared to adjust balance-sheet normalization
- Fed reiterates federal funds target is primary policy tool
- Fed says economic activity rising at solid rate, jobs strong
- Fed says labor market strengthened, unemployment remained low
- Fed says spending grew strongly, investment moderated
- Fed says core and headline inflation remain near 2%
So The Fed is saying everything is awesome with the economy but we are panicking out of our rate-hike and balance sheet normalization process because the market shit the bed?
It appears, at least at the initial glance, the risk trade is back on with the vengeance. Buy anything and everything and you should, in theory, do very well in the upcoming months.
I would caution against such a simple analysis. Just consider these three analytical data points for a second. First, Powell’s capitulation could and should be viewed in a negative light. Why go full dovish if wheels are not literally coming off Trump’s miracle economy. Second, just when investors think they have gotten it all figured out (green light to buy stocks), most often the stock market does the opposite. And finally, stocks tend to collapse as the FED pauses and/or cuts.
Luckily, you don’t have to guess what the stock market will do next. If you would like to find out what the stock market will do next, in both price and time, based on our mathematical and timing work, please Click Here
Please Note: Our latest call was a direct hit. While everyone was panicking our work projected an important bottom on December 27th (+/- 1 trading day) on the Dow at 21,725 (+/- 50 points). An actual bottom was put in place on December 26th at 21,713.
