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SPY's Next Move: Overbought Short Term, Medium Term Bullish



This article takes a small slice from our daily update that we posted to subscribers. Along with our non-stop chat and during-the-day calls, our updates include daily market calls, Fed calls, earnings calls, trading and medium term calls in large cap stocks like TSLA and AAPL and key macro tickers like TLT, GLD, BTC and USO. Led by long time pro Chaim Siegel, our goal is to help you make money with fewer headaches. Click this and you can try a free trial to get the rest, if you want. No pressure.


Stock Market Short-Term Overbought


In yesterday's update (to subscribers) I wrote that the market was overbought and in combination with hawkish Fed speakers we could get some risk. That's pretty much what took place. To work out overboughts the market needs to go flat or down. Down today is a step.


These overboughts aren't as simple as they just go away. We need to measure how the market responds to them. SPY down 1.6% is a normal day. If we see down 3-4% days then this uptrend can turn into a down trend. Another normal day like today though then I think overbought gets washed away and we can be back into an uptrend.


Fed Speakers Bearish


For tomorrow I also see more risk with more Fed speakers talking about higher rates also in combination with the market overbought.


The last core CPI at .3 was not enough for the Fed to shake deer-in-headlights that they are way off leaning the wrong way.


So while the market is bullish the Fed is not until we see the next PCE price but really the next CPI print. If inflation doesn't make more progress (lower numbers) then the market could have a problem because the market won't continue to try to outguess the Fed. In the meantime the general trajectory for inflation has been down and I think there's still gravitational pull for the data.


PCE Price January 27th, CPI Feb 14th. Next Fed meeting Feb 1st.


Bonds Showing No Inflation Risk


Bonds were up a lot meaning it does not agree with the Fed. The Fed talking tough means the bond market thinks they will effect a slowdown which is good for longer-term bonds. If bonds were worried about inflation especially with the extreme force of QT, they'd been going down. They are not. That tells me very smart big money is buying big in bonds against the Fed's QT and against the Fed's thinking inflation is a problem. Again, bonds would not be jumping especially with the Fed backing away from the bond market if there were inflation risks.


The bond market is usually much much smarter than the Fed.


The bond market up is also a good support for the stock market.


The QT risk for the stock market comes from the bond market. But if the bond market is holding firm then that's a shock absorber to the stock market.


I'm watching this... The Atlanta GDP estimate did come down today but to 3.5% so it's still strong. But this needs watching (here).


This article takes a small slice from our daily update that we posted to subscribers. Along with our non-stop chat and during-the-day calls, our updates include daily market calls, Fed calls, earnings calls, trading and medium term calls in large cap stocks like TSLA and AAPL and key macro tickers like TLT, GLD, BTC and USO. Led by long time pro Chaim Siegel, our goal is to help you make money with fewer headaches. Click this and you can try a free trial to get the rest, if you want. No pressure.


All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless. 'Model portfolio' trades are hypothetical to show direction, conviction and timing. If live trades are shown it is as an approximate snapshot at the time of publication and can change at any time in-between publications. Live Positioning section represents live trades and positions but excludes options hedges which can offset or change stated exposure levels. Elazar plans to but is not obligated to update changes in trades. Opinions given are at this moment and can change rapidly after this is published. If our calls are made public (outside the service) we may or may not update our opinions publicly. Elazar and its employees may take positions in the direction of the calls made in the service but also may add to or exit those positions at any time after this is published.

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