If you’ve followed the past year’s macroeconomic developments, you’d know the Federal Reserve’s in a sticky situation.
They denied that inflation would be structural for most of 2021 — they kept saying it would be transitory and tied it to short-term supply chain issues.
Then, Powell came out in November, and the policy expectations shifted.
2022’s rate hike expectations went through the roof, leading to a nasty tech selloff that bled over into the rest of the market.
This is the hard place they’re in. They know inflation’s the top concern among Americans right now, and if we head into the midterms with gas prices through the roof…
The regime will not be able to hold power.
Yet, if they pull the punchbowl away too fast, the markets will take a hit.
So what do they do?
They time the market.
I swear this will sound like some kind of tin-foil hat conspiracy theory…
But we’ve seen that when the market has had a huge run, some Fed governor come out and talk about the actions that need to be taken.
Take today. The Nasdaq has seen a run of over 15% from the March lows.
It was coming into a monster volume shelf, which we talked about in our Market Primer.
So what do we see today?
There it is — A hawkish Fed comment, right where we’ve seen these same comments play out in the past.
They’re going to play this cat-and-mouse game for a few more months, intending to break the current commodity trends.
And you know what? It could work, temporarily. We haven’t seen a good reset in X yet:
And MOO, an agricultural ETF, hasn’t had a pullback since the breakout happened in March:
I’d be looking at those kinds of names for key support levels.
Odds are this is not the final part of the move, but if the Fed gets its way, we may see these names come into profit-rich levels on our Trading Roadmap.
If you want to be ready for when that happens if it does…