Nothing could slow down the equities market last week and by Friday, FOMO took control. It also helped that it was the last week of the month – lots of window dressing to make the books look good.
Friday’s Core PCE Price index was better than expected as inflation numbers came in cooler than estimates (.3% vs .4% estimate). Personal Income was higher than estimates and Personal Spending was lower than expected. Does this mean the Fed’s actions are working? Are we finally going to tame inflation? Is the bank scare out of the way? Hard to say, but it does feel like inflation numbers are headed in the right direction without significant damage to employment.
Regarding banks, I’m not sure the problems are behind us. It’s possible we’ve seen a little under the hood of what could be a less than stable banking sector. We’ll see, but if there are more cracks in the banks, I’ll short the hell outa this market.
United States Core Pce Price Index MoM
So last week was great and all, but it’s about to get real. This week’s economic calendar is packed and will make or break lots of risk-on trades.
Monday: ISM Manufacturing PMI
Tuesday: JOLTs job openings
Wednesday: ADP nonfarm Employment Change, ISM non-manufacturing PMI, Crude Oil Inventories
Thursday: Initial Jobless Claims
Friday: Nonfarm Payrolls, Unemployment Rate (Market Holiday)
My focus this week will be to avoid giving back the gains from last week. No need to be greedy. I’m still largely in cash, although more exposed long than I was a month ago. I’ll probably leave it that way and look for day trades and momentum stocks on earnings, etc. There are a LOT of beautiful long chart setups, but unless upcoming data is strong, it seems more likely that these setups will fail in the short term. However, some consolidation here would be constructive.
I added more VCSH last week and played a good number of long and short side SPY options for good gains. Other than that, I’m exposed more long in my 401k and added more VOO to brokerage long-side account.
Trade ’em well.