“Fed watching” is far from my favorite game in finance…
After all, the Federal Reserve is boring. Have you tried listening to a Fed official speak?
They’re ambiguity specialists. You’ll never catch them taking a perfectly clear stance.
Even worse, the institution holds outsized power over the financial world…
In bull markets, it’s easy to mostly ignore the central bank. But in tough stretches, the Fed decides it’s time to act. And as we’ve learned, those actions ripple through the economy.
We’re feeling that right now…
As we discussed on Friday, the Fed holds the markets in the palm of its hand. Chair Jerome Powell just confirmed that idea after the Fed’s latest meeting last Wednesday…
The Fed raised the benchmark interest rate by another half percentage point. That sounds small. But it’s pretty sizable when it comes to the Fed’s policy adjustments.
Plus, it made the move despite the year-over-year change in inflation coming in at roughly 7% the day before. That was lower than analysts’ expectations. So you might think that result would lead to a more “dovish” reaction.
But not for Powell – at least not yet…
If you didn’t see Powell’s speech, even for “Fed speak,” his message was as clear as it gets. The Fed will keep raising rates as long as inflation remains elevated.
Sure, Powell said the Fed will consider transitioning to a more traditional quarter-percentage-point cadence moving forward. But the reality we’re facing is unavoidable.
From my vantage point, it appears that the Fed intends to push us into a recession. And that means the “hopium” addicts looking for a quick fix just got a reality check…
Regular Chaikin PowerFeed readers know the concept of hopium well by now.
And I explained in detail on Friday how even if the Fed changes course, stocks still face more pain ahead. History shows it won’t be enough to simply stop raising rates…
Every bear market for many decades has ended only when the Fed actively lowered rates.
Even if the Fed does slow its aggressive hikes – or stops them altogether – the data paints a clear picture. A new bull market won’t likely begin until after the Fed shifts gears.
But the thing is… nobody can know exactly when that will happen.
I’ve spent more than 50 years proving that the right data can help us see major moves in the market in advance. However, that’s only possible if you’re using the right system.
My system is called the Power Gauge.
It measures more than 5,000 stocks and exchange-traded funds using 20 different factors in four major categories – Financials, Earnings, Technicals, and Experts. And ultimately, it helps me see the future potential of any stock, sector, or industry by just clicking a button.
The Power Gauge is how we avoided the Big Tech and biotech minefields in 2022. And regular readers know the system also pointed us to the energy sector early in its uptrend.
Almost nothing is truly “impossible” when it comes to timing the stock market – as long as you use the right system. But winning a game of Fed watching is one of those things…
It’s a fool’s game that has burned millions of investors already this year. And all signs point to it burning millions more in just the first few months of 2023.
Folks, it takes more than just hopium to navigate a market like the current one. That’s exactly why I’ve spent my career developing data-driven systems.
Don’t rely on hoping the direction of the wind will change. Instead, follow the data to find opportunities that will likely soar no matter what’s happening in the broad market.
That’s what I’ll be doing. And I’ll be doing it with the Power Gauge at my side.
Good investing,
Marc Chaikin
P.S. Everyone thinks they know what the Fed will do next. But most of these folks are dead wrong. Even worse, listening to them could cost you everything in the early days of 2023.
Fortunately, you can prepare before the new year begins…
I just put together a special presentation to help you learn the exact signals I’m following to track the market’s next move. And just for tuning in, you’ll get the name and ticker symbol of what I believe will be the No. 1 stock in the new year. Click here for the full details.
