Market Notes – January 27/23

The S&P 500 added 0.2%, while the Dow Jones Industrial Average ticked up 0.08%. The technology-heavy Nasdaq Composite was up roughly 1%, closing out its best week since November.

The biggest mover on Friday were shares of Intel  which fell as much as 10% on Friday after the company’s bleak outlook disappointed. Intel reported a quarterly earnings miss after the close Thursday, adjusted earnings per share coming in at $0.10 against the $0.19 expected by the Street. Revenue totaled $14.04 billion, below estimates for $14.5 billion.

Martin was on Mike Campbell’s Money Talks today (click here to hear that interview..starts at 39:00) and discussed a few charts that he shows his subscriber’s each week and that investors should be aware of.

One of them is that the S&P 500 has displayed a reverse head and shoulder pattern since January and on Friday was able to push through the ‘neckline’ of that pattern, which is a bullish indicator.

In the short-term, Martin talked about how when the VIX Volatility Index drops below 20.00, we typically see a temporary top in the market. Today it dropped to 18.51.

Another chart paints a much different picture than most investors hold.  While all the noise is that the Fed will pause, then pivot & cut…so its BUY BUY BUY, there is a compelling chart that suggests that may not be the case. We have been showing our subscribers the following chart that shows when Fed is in a rate hike cycle like they are now, the bottom in the market aligns with when the Fed STOPS CUTTING rates, not STOPS RAISING them.

With bonds Martin talked about how the 40 year downtrend in yields has been broken.

He also pointed out that both the Bank of Canada and the Fed say they want the REAL rate to be positive, meaning they want the Central Bank rate HIGHER than the inflation rate.

The Bank of Canada rate is 4.5%, the Canadian inflation rate is 6.3%, so the REAL rate in Canada is -1.80%.  Therefore,  if they are true to their word, then rates need to rise &/or inflation needs to drop to get a positive real rate.

Back in November we told subscribers that gold was forming what we hoped would be a strong base foundation , and that turned out to be exactly what happened. Since that November low, gold has nicely broken through a series of our resistance targets at 1730, 1775, 1875, & 1910. Gold is up up almost 19% from that November low. Looking at the RSI (bottom of chart), gold is technically overbought here, so, we could see a retreat soon, with near-term support at 1875, with 1780 being a strong support level. Next resistance would be 1980

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