• Comments for January 31, 2018

    Today is FOMC and the last trading day of January. We should expect a strong equities bounce for two reasons:
    1. Funds want to book end of the Month profits.
    2. Yellen will raise rates one last time and show that the Fed is determined to stop the bubble. But since the market will see that the pace of rates hikes will be much softer from here, equities will push higher (probably after a first negative reaction to the announcement.)

    Yesterday, the equities markets were not as negative as what was shown in the prices. Both the 20DMF and the NQ8 MF were rather positive.





    Even the small caps attracted money



    Index investors did not sell and are even buying here.







    The negativity was confined to the income based equities (the defensive sectors,) which continued to react negatively to the weakness in Treasuries.











    Energy continued to show MF weakness, while materials might be on the verge of a bounce here.





    The PM sector still looks rather weak.





    Conclusions:

    I believe that weakness should be bought.