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With In Range January 22, 2023

Posted by Tom in Thoughts.
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January 20, 2023 – A lot of gyrations back and forth but not much overall movement.  Take look at the chart below and you’ll see a blue rectangle enclosing the price action from mid-September to the present.  This is . . . volatility in the flesh; a short term traders dream (“rise and repeat”).

Click on Chart to Enlarge It

This is all being driving by fears of future problems, then back to the fear of missing out (FOMO).  Traders and investors alike are trying to find some indication of what’s next for the economy, the economic sectors and of course stocks worldwide.

Earnings will over the long haul drive stock profits which drives stock prices (or at least the hope of future earnings).  Last week we saw the big banks report and it was a mixed bag.  Generally last quarter wasn’t that bad but future guidance was not very positive.  And then, came NetFlix.  Earnings per share were very bad, but they added far more subscribers than anyone imagined, so up it went.  (Surely big profits can’t be far behind . . . can they?)  Next week will be important with Big Technology firms starting to report.  That starts on Tuesday through Thursday, then resumes the week after.  I’d say it’s not so much about the current earnings; it’s more about what they don’t say, and what any comments are made about the future.

So what is doing pretty well right now?  Consumer Discretionary, Financials, Industrials and Materials are (currently) above their 50 and 200 day moving averages.  Investors are betting on no or a light recession and are in anticipation mode.  If the recession comes to pass that surely will change, so all eyes are on the FED and interest rate projections.  The Producer Price Index (PPI) has been slowing down, indicating that from a production stand point, inflation is slooowly dropping.

The Short Term Sector Strength table is shown below –

I am cautious.  Until we break out of this range (and that could happen quickly), I’m not tempted to jump back with “both feet”.  I’m being selective and it seems like the best opportunities right now are in Europe and Asia, but only with small positions.  Have a Good Week !    ………  Tom  ………..

Price chart by MetaStock; table by http://www.HighGrowthStock.com. Used with permission.

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