Interest Rate Timeline Tantrum

Hey Market Pilot,

The Federal Open Market Committee (Fed) came out and said that rate hikes may happen faster than they had been conveying initially. We all knew rate hikes were going to happen, and we even knew there were likely to be three of them in 2022. I am not sure when Wall Street was expecting those hikes to start, but if you divide 12 months by three, there are only so many months to choose from.

The news about rate hikes happening sooner and the market’s reaction seems like a bit of a tantrum, but also we can’t fight the market. There are larger forces at play and we have to go with those forces.

The Dow and the S&P 500 are still technically in an uptrend. The Nasdaq is too, but we know it is starting to suffer. The Russell 2000 has been in a league of its own and has been weak for several weeks.

Will the small caps bring down the rest of the market? Or have the small caps been an early warning signal?

I have been seeing money move into more defensive names over the last few weeks. Heck, utilities have started looking good and breaking out. Can defensive names still be a place to hide out? Would be nice if that’s the case since we don’t all want to try and play things to the short side.

We certainly have to be careful about the inability to find safe places. For now, I am trying and we will see how long they can remain bullish.

Your Profit Pilot, TG


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