Stocks are taking a breather as traders evaluate the avalanche of geopolitical news and Fed Chairman Powell’s latest hawkish comments. Still, with the long term view required for 401 (k) and IRA investing, there is no reason to panic here. Our ETF portfolio continues to hold up quite well and is positioned to move steadily higher over time.
Image courtesy of istockphoto.com
Market Update
Fed Chairman Powell threw some ice on the stock rally warning that long term interest rates may remain “higher” as “supply shocks” could stress the economy. His remarks couldn’t have come at a worse time as stocks are suddenly vulnerable.
As I discussed over the weekend, the wall of worry is gone as stocks test important resistance levels and need a shot of liquidity to keep the rally going. There have been plenty of positive developments on the geopolitical front, but the Fed remains resistant to adding significant liquidity to the system.
Still, with a CNN Greed/Fear Index of 71 this morning, there are just too many bulls which means that the climb is about to get harder.
The New York Stock Exchange Advance Decline line (NYAD) remains resilient after eking out a new high a couple of days ago. That said, if NYAD falters further, we may see a pullback in this market. The best scenario would be one of quiet sideways action for a couple of days as the market regroups.
The S&P 500 (SPX) is pausing at 5900 and could retest its 200-day moving average in the short term. Until proven otherwise, we are seeing a welcome consolidation, not a bearish reversal.
The U.S. Ten Year Note yield (TNX) is reversing after tagging the 4.5% yield. Better than expected consumer prices yesterday (CPI) and a much softer than expected producer price index (PPI) this morning are welcome news for inflation wary bond traders.
If you’re an ETF trader and trade ETFs in your 401(k) or self directed IRA, consider, Joe Duarte’s Sector Selector, which has been nibbling at tech and growth funds over the last few weeks, a strategy that’s been paying off. It’s FREE with your monthly membership to Buy Me a Coffee. Sign up here. If you’ve been thinking about starting a day trading career, my new book “Day Trading 101” will get you started on the right foot. For steady gainers, check out the Smart Money Weekender Portfolio. I’ve just added several new positions in this weekend’s edition.
If you’re stressed out with the market’s volatility your nutrition and wellness may be suffering. You can improve both and have a better trading experience with extra energy, and vitality by adding high quality supplements to your routine. For more, including daily discounts visit my Health Page.