Bank stocks announced strong earnings yet again, sending the Financial Sector ETF (NYSEARCA: XLF) and the Regional Banking ETF (NYSEARCA: KRE) higher on Wednesday. And many believe they will continue to outshine with a soft landing.
But is that really still the case?
CPI and PPI numbers may have come out softer, but the Empire ISM numbers show not only a shrinkage in productivity, but also that prices paid reached an 8-month high, while the outlook for the next 6 months is at 2-year highs.
Yes, markets are happy as yields and the dollar softened, but what else is rallying?
Silver, Gold, Oil, Corn, Copper, and Coffee.
Only Sugar, my main inflation barometer outside of the silver to gold ratio, is up, but not up this year.
Sugar, as shown in the weekly chart, has broken down under the 200-WMA for the first time since December 2020. However, it is holding the August 2024 low.
Sugar has been my go-to barometer for years.
You know what did make a new January high today and has not traded at these levels since 2018?
Ripple XRP. Big news as Donald Trump says: “We will be doing something great with crypto!” XRP will be great.”
I mention this because it made my Top 10 Picks in the Outlook 2025.
To sum up-
Don’t get too excited about the lagging indicators-instead focus on the present and future.
Most instruments are still in the January trading range, and we do not know yet what will clear and what will fail.
Today, for example, the indices have rallied into resistance and the January trend trade is alive..
In fact, at the time of writing, QQQ and SPY (barely) had cleared the 50-DMA, but small caps IWM and DIA have not.
IWM rallied to the January 6th high, so look how the stars will align?
January trend trade sets Thursday-it’s so exciting.
Nonetheless, most of the key sectors also remain below their 50-DMAs.
However, on the weekly charts, as I have written about recently, everything remains in a bull phase except IBB Biotechnology.
The bigger news of the day-Quantum Day announced by Jensen Huang, which sent the beat-up Quantum stocks soaring.
I have recently mentioned QUBT as a fave. That was up 54% at one point today.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
