The market uptrend continued for another week, with investors relieved that both “consumer” and “producer” inflation reports showed signs of inflation peaking and even beginning to decline. In fact, stock prices moved up the most on the two days these reports were released. 

Investors further projected this good news to possibly mean the Fed may ease up on the pace of interest rate increases – and even move up the dates of potential rate decreases next year – which would be another boost for the economy. 

This sudden and impressive rally means passive buy-and-hold investors are at least partially regaining what they lost from Jan – Jun, though they are still in the red. For active traders like us, however, this rally means significant – and quick – long gains since our analytic signals helped us “buy low”. 

Amazing what a sustained rally of just 4 – 6 weeks can do for prices – some of our long gains are already in the +40% to +50% range, some even over +100%, with many new weekly highs again this week. These few trades alone would make a great annual return for any investor, even without considering our many prior short gains and more gains possible in the next 4 months. 

It wouldn’t be unusual to see a pull-back in prices next week on some profit-taking. However, it’s been noted that a +50% rally from yearly lows (which has just occurred) has never been followed by a new decline to new lows. Thus institutional investors may assume that Jun low prices marked the end of the recent bear market and will be inclined to hold their long positions through any near-term volatility on expectations this rally has more upside heading into fall. We shall see . . . and measure . . . and react accordingly. 

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