[Market Outlook] Warning Signs Of A Top; Short-Term

Warning Signs Of A Top; Short-Term

Hi Trader,

The news of last week was the Fed's announcement about their "updated monetary policy strategy." The big change was to suggest that they would let inflation overshoot their 2% goal to prioritize getting unemployment as low as they consider realistic.

This probably isn't much more than stating what the market already assumed they are currently doing, but it does change expectations for how they'll act when inflation shows up without low enough unemployment. The absurdity of the inflation debate is that we all know that the current policies are generating inflation. It just depends on how you define it. For example, several times this week I heard from customers who wanted to buy shares in TSLA and AAPL but were concerned that their prices are too inflated. Fortunately, these great companies are attempting to keep inflation under control by reducing the price of their shares by 1/7 and ¼, respectively. This will happen on Monday, so if you're looking for TSLA or AAPL for a lower price than they were on Friday, Monday's your day. As you know, there are no guarantees that they'll stay lower for much longer. The problem with the current monetary policy isn't that it is to slow to stimulate inflation. As I just pointed out, it's been incredibly effective at inflating asset prices for well over a decade now. So one take away from the Fed's 'new' policy shift is that they'll continue to generate the inflation that's rising, and focus on the inflation data that's muted by the components it tracks. As a result, let's focus on the area where inflation is rising with the question… When will the SPY and QQQ stop rising? Click here for two warning bearish alerts to look out for this week Best wishes for your trading, Geoff Bysshe President MarketGauge.com (Geoff is filling for Keith until August 31st)

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