Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Macro transition; Goldilocks now, Deflation later

Stock-Markets / Stock Market 2023 Mar 16, 2023 - 10:05 PM GMT

By: Gary_Tanashian

Stock-Markets

Since projecting the Q4-Q1 broad market rally back in November, we have been managing a macro transition within this rally. Based on the leadership of the Semiconductor sector and Tech, it has been dubbed a “Goldilocks” (inflationary pressures not too hot, not too cold) transition, as inflationary pressures ease (the inflation has come and gone, while it’s lagging supply chain and services related effects linger on) and the former inflation trades under-perform.

There is a word for what supply chain and related services are doing and it’s called “gouging” by opportunistic entities squeezing the inflation hysteria for all it is worth. But I digress.

While waiting for the gold stock sector to truly become unique (not quite yet) in the post-bubble environment an honest look at the macro will yield a developing fundamentally positive view for gold mining (details beyond the scope of this article), but also insofar as the macro transition from Goldilocks to deflation has not yet come about, a hell of a lot of quality Tech/Growth stocks beaten down and looking to rally (actually, many have already begun to rally).


So our chain for the stock market has been a microcosm of the Semiconductor > Tech > Broad (SPX) chain we used in 2013, beginning with the Semi Equipment sector’s ramping book-to-bill ratios. Microcosm in this case means shorter-term and interim, whereas the 2013 situation began a multi-year Goldilocks phase. This post from February 28th updated the chain, which was intact then and remains so today.

But the title begins with “macro transition”. We’ve already transitioned from inflationary to Goldilocks, as anticipated. Now, while anticipating another transition into perhaps more severe liquidity problems later in the year we are currently managing a relatively pleasant interim phase. I have been focusing on Semiconductor and key Tech stocks, like the beaten down but growing Cloud security area, for example. Semi is leading Tech, which is leading the broad market which, importantly, has avoided a breakdown through our ‘do or die’ parameter using SPX as an example.

While many charts within the targeted sector areas are looking prospective, the S&P 500 has been our guide as to when to call it a day on the Q4 (2022) – Q1 (2023) broad rally, at least from a US perspective. As is typical of markets, SPX tested the limits of our downside parameters yesterday, amid the banking sector uproar (a post from yesterday shows the destruction there). The broad SPX includes multi-sectors, including the banking sector. It is no wonder it is relatively weak. But the leadership chain linked above is well intact and as long as SPX holds the key December low of 3764.49 and Semi and Tech leadership continue, we can keep the Goldilocks rally view alive going forward.

With a market in transition, it pays to look under the surface and be aware of the dynamics in play at any given time. I am not pro-Tech or pro-Semi. I am just noting what appears to be in play beneath the broad market’s surface. With a couple of banks blowing up the word is that the Fed may have finally broken something, as we’ve been expecting to happen before they even consider stopping the rate hike regime. But we have key macro indicators to watch behind the scenes that as of last weekend (NFTRH 748) were not yet sounding alarms.

Again, I expect Goldilocks to be temporary, maybe very temporary because typically when the Fed halts a rate hike regime that is when troubles brewing beneath the surface tend to bubble up to the surface. The Fed is on the back 9 (and eyeing the 19th hole) of its rate hiking regime and before 2023 is done I expect all those inflation headlines to have given way to the next hysteria, which will be in the opposite direction.

Aside from gold miners and prospective Semi/Tech, for now cash is still paying out a decent income and the bond market may also become constructive. So there’s that too. Be aware of discrete sector character, time frames and parameters like the SPX 3764.49 parameter above. And beware autopilot thinking or the agendas of perma bulls or perma bears going forward. Oh, and over the course of the year, keep an eye on the gold stock sector as the expected relative performance of gold to other markets should eventually manifest in a stellar investment case for quality miners (often a contradiction in terms, I grant you).

For “best of breed” top down analysis of all major markets, subscribe to NFTRH Premium, which includes an in-depth weekly market report, detailed interim market updates and NFTRH+ dynamic updates and chart/trade setup ideas. You can also keep up to date with actionable public content at NFTRH.com by using the email form on the right sidebar. Follow via Twitter ;@NFTRHgt.

By Gary Tanashian

http://biiwii.com

© 2023 Copyright  Gary Tanashian - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Gary Tanashian Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in