• Fonzie could never admit when he was wrong.  We can.
  • A more significant break above the 200-DMA on the SPX will be quite positive.
  • The dollar is testing key support…and gold is close to key resistance.

If there is one rule we try to follow very closely, it’s the rule that says that when we are wrong, we should admit it.  This is not a rule that many people follow on Wall Street, so we think it is a good one for us to subscribe to.  Well, there’s no question that we were wrong about how the market would react to Chairman Powell’s speech yesterday…and we readily admit it.

We did not think that if Mr. Powell basically reiterated what he and others have said about their monetary policy recently, it would not create a strong rally.  Instead, that is exactly what took place.  We thought that since the market had already rallied recently…and that since the Fed had already signaled that the upcoming rate hike would be smaller (50-basis points) than their past four hikes…that the upside potential for the market was very limited.……Yes, Mr. Powell did make a couple of comments that could be seen as slightly less hawkish, but for the most part, he didn’t stray far from what the Fed’s narrative has been for a while now.  However, this DID turn out to be enough to give the stock market a nice boost, so we were dead wrong.

(When we were young kids, one of the most popular shows on TV was, “Happy Days”…and it’s biggest star was a character named “Fonzie.”  He was the coolest guy in town.  That meant that he could never admit that he was wrong.  He did TRY to admit it in one episode, but he just couldn’t get the words out.  He said, “I was wr”…”I was wro”…”I was wron”…but he could never get the full word out.  It was pretty funny back in the day…and it frequently reminds us of how most Wall Street pundits act in today’s world when they are wrong.)

Anyway, so where does this leave the market right now?  

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