INVESTMENT EDGE
It's really clear to me at this time, global investors are strongly favoring stocks and we continue to charge higher across the globe. Of course. things can and do change in an instant so you need a plan, but until that happens we are in an equity bull market that cannot be ignored.
My latest video making this case is available for viewing at the link below
Are you seeing the same?
Happy New Year
My latest video, a quick recap of the important charts of 2016 is available for viewing at the link below
https://www.youtube.com/watch?v=g70om7d6VVQ
With the FED raising interest rates yesterday and setting the expectation there will be 3 more in 2017, the dollar as projected ripped higher and confirmed November 21st breakout from the (blue) rectangle. The ongoing saga of whether the dollar has topped or just consolidating for its next move higher can finally now be put to bed after 95 arduous weeks.
Those that follow know rectangles are my favorite patterns to invest in as the lines for buying and selling are easily determinable, as are the targets. In this case the pattern break and confirmation projects to an upside target of ~$108. On a much longer term view, if this current breakout turns out to be a continuation from a very long term bull flag, that target is north of $120.
I have been talking about the possibility of the USD testing all-time highs since it broke out of long term consolidation in mid-2014. Not wanting to repeat myself but I do because the implications are huge. It is THE elephant in the investment room and should not be ignored. Understanding the intermarket relationships (correlations) between your investments and the dollar will be valuable knowledge and keep investors on the right side of the track going forward while king dollar pushes higher.
With the election behind us the market has chosen its path of least resistance and, bythe way, is once again going against what everyone predicted. Seasonality trends should provide a tailwind through the balance of the year to keep equities elevated. As such, keep an eye on the money flow (rotation) is it gives a huge clue as to where the big boys are placing their bets.
Below is the link to my most recent CotM video
There was some rotation out of bonds and into stocks since the election and there has been some rotation within the stock market itself. As you would expect the high yield investments (REITs, utilities, consumer staples) have all underperformed as long bond rates have spiked higher. The bond market lost more than $1T (yes, that is one trillion dollars) last week.
It appears as if money managers and investors are setting up for what they believe will be the new winners once Trump takes office. Materials and other inflation/growth vehicles were on an abbreviated week tear. Technology, the past 7 year darling could get out if its own way as it was lower in spite of the post-election rally. The broader stock market shifted into a lower gear for the time being, having lost the support of its most influential sector and most of the influential momentum stocks.
Things are a changin’
Here’s what I want you to take away from the week that was. In fact, if you remember nothing else, remember this: Markets stall or sell off on uncertainty and they rally hard on certainty. Markets like answers. They don’t like President Trump any more or less than they like President Clinton. They will adapt. Will you?
