Despite the DOW continuing to make “modest” new highs, we must remember, the DOW “only” represents 30 stocks. All the other “important” indexes remain directionless. They have been struggling for several weeks now which suggests the possibility of hitting lower levels before they could finally bottom again.
The metals (gold and silver) are being affected by the rise in interest rates which in turn, is affecting the decades-long “up-move” in the Tech sector. The recent advances/declines for the Nasdaq (mostly Tech) and the NYSE have been anemic, to say the least (not a good sign).
Of note, we have seen the financial sector begin to gain some traction after being quiet for months.
Currently, the Nasdaq Composite (tech) is down 8%, the S&P 500 is down 1% and the Russell 2000 (small-cap sector) is down 9%.
This is one of the reasons we have maintained a goodly amount of cash in accounts as well as to help mitigate the effects of a possible sell-off/correction. Once it stabilizes and finds a comfortable support level, we will take advantage of buying opportunities, when presented.
Chairman, Jerome Powell and the Secretary of Treasury, Janet Yellen both stated during the recent congressional testimony and Fed meeting that the economy is “on track” to gain strength. This calls into question the need for the recent $2 trillion stimulus initiative, especially given the many “political pork barrel” issues included in the bailout.
Some good news, inflation appears to be holding steady at the moment.
As always, we will do our best to monitor the markets/economy and keep you informed.