Future Fed Governor Speaks

The stock market had a modestly wild day on Tuesday with the indexes spurting up for the first few hours and then dropping into the middle of the day before rallying to close very near flat on the day. One of the future Fed governors was speaking about upward pressure on inflation and how that may cause the Fed to raise rates again. The market seems to be a little jittery about the prospect of inflation because it doesn’t want the Fed to raise rates again. On the other hand, there wasn’t much in the way of fear on the Street.

The volume was again light, although slightly higher than Monday’s volume. Our position is that volume needs to be part of any rally and a rally without volume is doomed. Last August, there was light volume also. Just for kicks we decided to see how the indexes have performed over the past year.

............................A year ago................ Today
Dow...................... 10,569 .................. 11,339
SP 500 .....................1221 .................... 1298
NASDAQ Comp ............ 2141.................... 2150

As you can see the NASDAQ Comp has barely budged in a year while the crazy Dow is up 750 points. This is one confirmation that the broader market isn’t doing quite as well as the blue chips. That is Not bullish.

As we head into Wednesday’s trading we note the two housing reports due out the next two days, existing home sales on Wednesday and new home sales on Thursday. Both of these are expected to show a decline which on the surface the stock market should like, you know, the whole inflation being in check so the Fed doesn’t have to raise rates again.

Underneath, the reports could show continuing deterioration in the housing market with a corresponding impact on the economy at large. We look forward to some Action in the market and we are hoping for it to be on the downside.

With that in mind, we note that our indicators are again flashing red, as in overbought. The five day upside volume peaked on Friday at a modest 989 thousand; a low high due to the low volume we have seen. All signals show a weak advance last week and a modest rollover this week so far.

[Reminder: No new posting for you on Friday—our last post this week will be tomorrow night for your reading on Thursday.]

Dow Industrials: 11,339.84 -5.21
QQQQ: 38.43
RYVNX: 21.90 (own)
RYAIX: 24.23
RYCWX: 41.74 (own)
TLT: 87.11 (own)
BEGBX: 13.69