The Fed, Value, Nasdaq

This week we hear from the Federal Reserve (hopefully clarify tapering prospects), hopefully providing clarity on their stance on current inflation, interest rate hikes coming, and unemployment. 

Last week, the S&P 500 hit all time highs and Nasdaq approaching its all time high. The market is now saying it does believe current inflation is transitory as we have seen more buying. If we look at some commodity prices to evaluate the permanency of inflation, we can see lumber has come down 30% (supports transitory),copper dropping, soybeans dropping, treasury rates soared now falling,  however, oil remains bold in its move higher, sitting at $71. 

The "value trade" and reflation trade have been center stage in the markets this year with some bank stocks up 40% and industrial stocks up 35-80%- can this sustain? The banks may get another jolt higher on interest rate hikes, I don't think the move in Caterpillar will get back to all time highs and push higher. With 10-year yields falling, looks like 1.3%, I definitely don't see it. I think the flow will get back into technology, growth and remain in oil/energy, as oil is approaching $80. 

 

Nasdaq (IXIC) Index

As we look at the trading range in the Nasdaq- the trend shows it can rise to 15,731 or fall to 13,436 (most extreme range). 14,211.57 remains the 52 week and all time high in the Nasdaq index and we are just under 200 points under now. 

 

Notable earnings:

Tuesday: Oracle

Wednesday: Lennar

Thursday: Adobe, Smith and Wesson

 

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