Karpel’s Corner: Getting Macro in the Corner

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and  never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

Getting Macro in the Corner

The Fed is behind us and the trend is intact. But I’d like to get macro and play a little armchair economist.

The Fed release did say they expect GDP to be on the lower end of their forecast. No surprise, there. What is interesting is that this comes when they continue to taper.

In the past, when the Fed leaned to lower GDP forecast, the market shook it off. We had stimulus working. But, now that they are gradually pulling stimulus back every month, at what time does the market react if we are still forecasting growth at the lower end of forecasts?

This is why I have been discussing the Small Caps ($RUT/$IWM). These domestically sensitive stocks could flag further strength. Or, if they stall and pull back in advance of the Large Cap indices, well head that move.

See you next time at the Corner!