Special Bulletin: February 1, 2024 (2p Update)

 Opposite the Fed Day?

Many investors are aware of the term “opposite the Fed day.” It has been observed that often (a good majority of instances) the stock market will do the opposite of its violent move from the Fed rate announcement day on the day after. So, with that tidbit today should be up. Voila! 🙂

Today is also the first day of the month and that means strong inflows from 401k and other retirement plans. This is a reoccurring payroll item, especially in the U.S., and causes an upward bias on most first days of the month. (Note: Beware of the “first” days that the market falls.) So far so good, as far as the market goes in response to yesterday.

Yesterday’s large declines in higher volume resulted in a new Distribution Day on the major indexes, and was brutal for many sectors- regional banks, in particular. A bull wants to see an immediate snap-back rally today to help their conviction in their positive view. The bears were hoping for a carbon copy of yesterday’s action to “dog pile on” by selling more and cause a breakdown under the 21-day mav’s. At this point today, the bulls are winning.

There is a important brand new resistance level above the major indexes- the price gap under the (01/30) close caused by yesterday’s sharp sell-off. Suffice it to say, the major indexes cannot go higher unless they fill, close, exceed and hold that price level. S&P500 price levels to watch are 4907, 4925 & 4931. Expect some turbulence there.

And as if that wasn’t enough to consider, then there’s February. While this month is known for sweethearts, it is anything but kind to the stock market historically. It ranks as the 2nd worse month for gains over many decades. Now before you get too bearish, please understand it has positive returns almost half of the time. Couple that with a slightly stretched market that is now facing the probability of later (and fewer) rate cuts this year, and an investor may need to look elsewhere for a valentine.

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light (SPX 4,887.01 at 2p). Our “Core Four” (see top of page) has shifted to 2 green and 2 red lights with a VIX that is still over its 50-day mav. FYI: The advance/decline lines are still unimpressive. But the number of daily new 52-week lows on the NYSE are still tame.

Interest rates are collapsing further today strongly suggesting a recession is coming – keep an eye on the 10-year US T-note yield and continue to expect a period of volatility.

Finally, remember the trend is up as long as the major indexes are trading above their 21-day mav’s. Having said that, the captain may be about to put on the “fasten your seatbelt” sign.

“Be of sober spirit, be on the alert. Your adversary, the devil, prowls around like a roaring lion, seeking someone to devour. But resist him, firm in your faith, knowing that the same experiences of suffering are being accomplished by your brethren who are in the world.“  1 Peter 5:8-9 NASB 1995  

Game plan: We maintain the stock market likes something it sees in the future. Is it lower rates? (sure) Real leadership returning to Washington? (hopefully) A whirlpool in “the swamp?” (Oh! Please!) The trendlines are still properly stacked and the major indexes remain above their 21-day mav’s. Remain on alert! Avoid complacency. Pray for peace for Jerusalem.

Ps. Happy birthday to our dear friend, Lisi!

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®