The Fed Changes its Tune...and it Shakes Up the Markets

Chairman Powell throws a wrench into the works of the "melt-up" scenario

Important Note:  I will be traveling for a wedding next weekend, so I will be sending out an abbreviated edition of the weekend piece Thursday evening……..Also, the following week is the holiday-shortened one for Thanksgiving, so there will be no piece that weekend (unless we see some major new developments). 

One more item.  Our second point today is a rather long one…and deals with several different issues pertaining to the tech sector (and not just Nvidia).  Therefore, we have combined it into two points…so as to keep the entire piece from becoming too long……..Thank you. 

Table of Contents:

1)  How much does an improving economy help an expensive stock market…when the outlook for bond yields changes?

2 & 3)  Bifurcation in the tech sector never lasts very long.  Those stocks (in general) move in tandem before long.

4)  The dollar has become very overbought and over-loved.  This could catch a lot of people offsides soon.

5)  Updating the charts on the major averages.  They’ll have to fall quite a bit further before we raise any warning flags.

6)  There has been zero upside follow-through from the banks & the yield curve since the day after the election.

7)  China’s stock market is not acting anywhere near as badly as the Wall Street narrative is stating right now.

8)  Bitcoin is now reaching very overbought levels, so caution should be taken over the near-term.

9)  Potpourri…..The situation in the Middle East is still a concern.

10)  Summery of our current stance.