January 30, 2023
Markets:
Stock futures traded lower on Monday morning amid a January rally as investors braced for the busiest week of earnings season and a possible interest rate hike from the Federal Reserve.
There are several tests this week for this 2023 rally. About 20% of the S&P 500 will report earnings this week, including McDonald’s and General Motors on Tuesday followed by tech giants Apple, Meta Platforms, Amazon and Alphabet later in the week.
The Federal Open Market Committee meets on Tuesday and Wednesday, when the Fed is expected to hike rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation. Traders have pushed stocks higher this year in part because of softer inflation reports, which they suspect could cause the Fed to soon pause its hiking campaign.
Traders are overwhelmingly confident that the Federal Reserve will hike its benchmark interest rate by one-quarter of a percentage point on Wednesday. According the CME FedWatch tool, there is a 99.9% probability of that relatively small hike this week. If that proves true, the Fed’s new target range will be between 4.50% and 4.75%.
Portfolio:
Great month thus far and we want to end super strong and get ready for the new month ahead. So much is coming to us this week with monster earning reports and the Fed. Really excited for this, no matter what the reaction is, it'll remove an overhead in the markets and allow us to move forward short term. Line in the sand; 4100 for the bulls and 3890 for the bears. Everything in between is just air with lines to trade.
This week we enter the week holding positions in MARK and AEHR. We will be adding this week so please be ready. We do want to be a bit more patient before the fed but queue is igniting and we love to see this activity. So much opportunity, cannot stress this enough for the next several months. We hope folks see what's developing in specific sectors. Be ready and let's have a great week.