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THE FED ISN’T FOOLING ANYONE

Outlook: A seemingly dovish FOMC statement turned unexpectedly hawkish conference fooled market participants for a moment, but the price action over the remainder of the week followed in line with my assessment that inflation has peaked, dollar has peaked, and risk assets will benefit over the coming months. Let’s not forget that in March 2008, when Bear Sterns failed, the market bottomed and subsequently rallied the two months that followed. This occurred when macroeconomic conditions were eroding fast while unemployment was well underway a sharp ascent. I remain risk bullish into Q2. 

QQQ: It is unlikely we are in the midst of a local double top. I like QQQ to attack the August 2022 high of 334 and possibly more.

SPDRs: I’d buy XLF before I bought XLE. 

IWM: While small cap has been left in the dust, I like a triple bottom here and a run at 200.

BTC: When gold and tech get love, BTC does too. Final local resistance at 30,000 which I believe will be penetrated.

ETH: A sudden lag in performance relative to BTC was unexpected. Sometimes they lead, sometimes they lag. I expect the erosion in ETH/BTC to reverse, but I won’t rule out another round of relative underperformance. ETH to 2000.

Gold: Okay we’ve hit 2000, now what? Gold’s RSI doesn’t break 70 unless we are fetching new highs. I expect that before the end of this rally. Gold above 2000. 

DXY: Support at 100. How and when we get there I don’t know, but we won’t see 105 before it. 

Yields: The whole curve will continue to erode, sideways at best. 

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JANUARY 12, 2025 OBSERVATIONS

Multiple selloffs in equities following strong jobs and ISM data highlights a general concern of returning inflation at a time when valuations are already quite...
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