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I do not think a major market top is being made here. To the contrary, the CPI data could cause a pullback in certain areas of the market, but our long-term models remain bullish with our January 13, 2023 buy signal still intact. Extended stocks are vulnerable, but odds are that a pullback of 4-7% in the $SPY present a buying opportunity.
Interestingly, the hot CPI data may in fact help to keep the rally going. Why? Because a less likelihood of aggressive rate cuts makes small caps less favorable (as seen in the Russell 2000 reaction today). Money that has favored the megacap names (which dominate the index weightings) may not rotate out, thus keeping an already extended area of the market supported.
We have enjoyed great success in our individual stock trading and our index positioning. That said, going into this week, I was getting concerned that we may have gotten to a point where too much of a good thing was creating some short-term froth. A pullback was expected, and I started positioning for it last week. We further reduced risk today and tightened stops.
Volatility has been low and today may have started a move higher in the VIX off of persistent low levels, which would make sense as we enter the relatively weak part of the year based on cycle work.
However, if we can get rate cuts around the middle of the year without a recession. The convergence with a strong 2nd half 2024-1st half 2025 Presidential cycle and the strong tendency after a first rate cut, could set the market up for a very strong rally and a continued bull market.
In the meantime, pullbacks are normal and healthy, as long as they are within the context of a long-term uptrend.
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Key Events This Week:
1. September PPI Inflation - Wednesday
2. Fed Meeting Minutes - Wednesday
3. September CPI Inflation - Thursday
4. OPEC Monthly Report - Thursday
5. Jobless Claims Data - Thursday
6. Total of 12 Fed speaker events
Huge week for inflation and the Fed.
Milady devs, BAYC devs, other successful NFT Devs all frequented our discord prior to their own launches. We were one of the very first riding the wave, and we were imitated with a few of our novel concepts!
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Please support my bike marathon fundraiser "Ride for Rebecca" by tweeting this at your favorite Celsius-sponsored influencer. We will be raising up to $15k for each of the most vulnerable victims of the $3B #Celsius fraud.
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Pioneering stock speculator, #entrepreneur, author, and philanthropist William J. O'Neil has passed away. He is best known for the CAN SLIM® #investing strategy. His #legacy continues today through his companies and nonprofit efforts. https://t.co/jod6m23mTw
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