15 rate hikes and I’m still bullish – here’s why
Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim’s Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
The Fed did what everyone expected, but their
policy statement left the future just as vague as before the meeting began. The
stock market remains in a confirmed uptrend as evidenced by institutional buying
since mid-February and a lack of serious selling pressure. Even with such a
positive statement as this, the market and economy for that matter remain
surrounded in a cloud of uncertainty. After 15, count them F I F T E E N
consecutive rate hikes by two different Federal Reserve chairmen the stock
market still remains just off 52-week highs.
This is a testament to the uptrend we have seen, but even this type of strength
will have trouble withstanding further uncertainty if Fed Chairman, Ben Bernanke
does not give us a clear direction soon. It is almost a given that rates will
rise again in May as most economists are speculating on the Federal Funds rate
settling on at least 5.00 to 5.25%. After Tuesday’s move, they stand at 4.75%.
The stock market seems to be acting similar to 1994. That year stands out in my
head VERY clearly because it was the year I established the investment
philosophy I practice today. I recall the slow market giving me time to read
such great investment classics such as “Reminiscences of a Stock Operator” By
Edwin Lefevre and “The Battle For Investment Survival” By Gerald Loeb. If you were
trading at that time, you obviously remember the massively profitable benefit of
being prepared heading into 1995 and of course the rest of the 1990’s is
history.
Fortunately, there is no need to guess if this market is going to act like the
market of 1994-1995, because we can simply follow price and volume action as
well as that of leading stocks. We have already discussed that price and volume
remains in a confirmed uptrend so unless distribution creeps into the market we
are set. Leading stocks are still present with names such as Netease,
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NTES |
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PowerRating),
CH Robinson Worldwide
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CHRW |
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CME |
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BOT |
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PowerRating).
The remainder of the week’s trading should tell us if institutions are willing
to stick out the uncertainty and continue buying. For now, the tape has been
telling us to keep our eyes open for opportunity and don’t get caught in the
wrong place.
Tim