Last week ended with a bang, moving the markets up for the first time in two weeks.
I’m not sure you can call that any kind of Jolly Elf rally.
It was fueled by a report that unemployment was still low at 3.5%, but wages slowed in their growth.
Again, the thought being that the Federal Reserve would not need to continue raising interest rates at past levels. It is almost like investors are desperate to create a dialogue that will support higher stock prices.
Slower wage growth is one of the most important measures that the Fed is watching.
The Fed has stipulated that it is not concerned about whatever level the stock market is at or is headed.
I would say, however, that they will watch the ongoing news of layoffs at major corporations.
Goldman Sachs announced laying off over 3,000 employees.
Amazon acknowledged hiring far too many and would be laying off.
We shall see if the shortage of workers finally has come to an end.
I still see hiring signs at almost every business I enter.
Only time will tell the truth.
What will be obvious quickly is earnings reports.
Unlike China, where the government can stipulate whether companies make profits or not, corporations have to pass muster with auditors, boards and regulators.
This week will bring the financial earning reports. Some analysts project the first down quarter for earnings since the pandemic in 2022.
They are seeing gains in energy and industrials.
You only have to look at last week and see the impact of poor earnings as Bed Bath & Beyond is headed for bankruptcy.
There is no good news out of Lululemon.
It seems to indicate that consumer consumption at many retailers has come up short.
Macys is talking about laying off employees as sales lag.
While these are significant, the real canary in the coal mine screaming will be what happens in tech.
The FANG stocks took us up and, of late, down.
There are many pointing to Meta just due to value from previous highs.
I am looking a little further down the food chain to a company like Broadcom.
It is well placed in the chip sector, being diversified in various sectors, and pays dividend of over 3%.
I would also have you watch the Standard & Poor’s 500 stock-index holding above 3800.
We spent the spring and summer testing the 3600 level over 6 times.
Now we are testing 3800. That is significant as some suggested that we might see 3200 or lower.
I believe that we will trade in a range between 3800 to 4000.
Hopefully, that will be a base for a move higher later this year.
Buying value though will be difficult and short-term trading is even harder.
It may be time for me to find a new less expensive hobby.
