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April 21, 2023 - This week’s title is a ‘Play’ on the kid’s phrase “Ready or Not, Here We Come” in ‘Hide & Go Seek’. This market is trying to figure out whether the October low was in fact ‘The Low’ for this cycle, or are we in for another drop. And it all depends on if the FED can engineer a ‘soft landing’ with an modest economic slowdown or if we just go into a recession. October was a guess that, even though interest rates were rising, that we were close to the end with a soft landing. If not . . . a major slowdown and recession are around the corner.
The chart above is my point. In the past, recessions did not start with interest rates rising; they started as the FED cut interest rates. (yeah, I know, it is counter intuitive but true) Corporate earnings are generally slowing / lower and next week we get a big dose of big tech earnings and forward guidance. A modest slowdown is the goal but only time will tell if the consumer pulls back in a big way, for a longer period of time. Hence the price chart showing two different trading ranges. The lower base trading range in Blue and the current higher range (hopeful) one in Green.
Add to all of this the unknown of Russia’s reaction to a Spring Ukrainian offensive in the war and the political theater of the debt limit. BTW, the fastest way to devalue the US Dollar and raise prices would be a default. Hard to believe that anyone really wants that, but . . . . I also note in the chart that the upper range level goes all the way back to September 12, 2022 (green circle). Interesting.
With trillions of dollars remaining on the sidelines it’s easy to say that the future is unclear and thus I’ve taken only small select positions. I think we really need to see a weekly close above the 12270 level on healthy volume. That would indicate longer term investment is back in vogue. Have a good week. ……. Tom ……. *Price chart by MetaStock; table by www.HighGrowthStock.com; other as shown. *
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