Q4-Q1 plan engages
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Relief provided by an easing October CPI "inflation" report the trigger
It was bound to happen sooner or later. October finally showed an easing comp in what most people think of as inflation (CPI)* and markets that were ripe to rally for other reasons used the "CPI inflation" report as the trigger.
NFTRH has been on alert for a potentially positive Q4, 2022 to Q1, 2023 seasonal play since first uncovering the post mid-term election cycle"s positive implications over a month ago (NFTRH 725).
Here are the averages of all pre and post mid-term elections since 1962. Sure, nothing is ever guaranteed in the markets, including historical facts, averages, comps and analogs. But as we have noted it is considered a tailwind. Pre-election is consistently weak compared to non-election years and post-election is consistently strong compared to those same non-election years.
Some prime elements for such a play (and this is all it is indicated to be as those celebrating a fade in inflation today will not be too happy down the road when inflation signals fall uncomfortably low) we"ve been tracking have been as follows:
This was a pure expression of "equal and opposite" dynamics to the Q1, 2020 deflationary fear fest. How poetic for inflationary hysteria to follow deflationary terror as represented by such a beautiful picture. A picture of excessive momentum in the opposite direction to 2020"s excessive momo.
As for ways to "play" the relief phase, detailed information is reserved for NFTRH Premium. But think about these elements:
Realize that the odds were in favor of a relief phase in Q4-Q1, and bear market relief can be strong. But also realize that there are upside technical parameters well north of here that would need to be taken out before TA can call a new bull market. Realize also that today"s celebration about a fade in "inflation" * will likely become tomorrow"s (or Q1, 2023"s) swing toward an uncomfortable drop in inflation expectations. These are the volatile considerations that your heroes at the market micromanaging Federal Reserve have created.
I invite you to check out a 2 week free trial to NFTRH Premium during the Q4 to Q1 window. It may be even more important to get the markets right as the window closes than it would be to be correct today about the opening of the window.
* CPI and other lagging "inflation" reports represent the effects of the inflation created by ramping money supplies, courtesy of the US Federal Reserve and its central banking fellows. But they are not "inflation". That happened in 2020.
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