Two key market events almost no one is talking about

And neither of them is Nvidia’s earnings report EDITOR’S NOTE: I’m sharing some market analysis from the team over at Avalon today. From time to time, I like to give you a behind-the-scenes look at what clients at money management firms come to expect from their investing teams. Dear Reader, On Wednesday, the focal point for most investors was NVIDIA's eagerly anticipated earnings report released after market close. However, two events happened earlier in the day that had perhaps even greater importance. The first was the treasury bond auction of 20-year paper which, once again, did not go well. The auction had a record tail of 3.3bps, with foreign bidders dropping to under 60% from 74% in November, and dealers left with 21% of the auction, double the November level. (A “tail” is the difference between the average and cutoff prices, meaning buyers got bonds at lower prices, i.e. higher yield, indicating weak demand.) I have written in the past that the ability of the U.S. to continue to fund its record deficit at favorable interest rates is critical, especially as interest costs on the debt become increasingly higher. Reaction in the bond market was negligible. At present, the long-bond futures remain in a trend channel lower (rates increasing). The second event was the Fed releasing the January FOMC meeting minutes, which reaffirmed the “higher for longer” theme and begs the answer to what will it take for the Fed to loosen its policy. Regarding the economic outlook, participants judged that the current stance of monetary policy was restrictive and would continue to put downward pressure on economic activity and inflation. However, they remained concerned that elevated inflation continued to harm households, especially those with limited means to absorb higher prices. Thus the Fed remains in a wait-and-see mode. “The coming months should reveal whether the recent inflation stickiness is a one-off… we cannot rule out that progress on inflation is stalling… If keeping policy rates at current levels for longer is not going to do the job, the FOMC might even have to think about hiking again.” The yield on the highly watched Ten-Year U.S. Treasury displayed little reaction but remains within a well-defined channel higher. None of this seems to have mattered though, as the blowout quarterly earnings from NVIDIA Corporation garnered all the attention. NVIDIA reported fourth fiscal quarter earnings that beat Wall Street’s forecast for earnings and sales and stated revenue during the current quarter would be better than expected, even against elevated expectations for massive growth. Here are the numbers: Earnings per share: $5.16 adjusted vs. $4.64 expected Revenue: $22.10 billion vs. $20.62 billion expected This has sent the stock flying, up nearly 15% today alone. The challenge of the current market is stocks like NVDA appear to be more the outlier vs. the “average” stock. The semiconductor bullish percent is currently in a column of O’s meaning that demand has been weak for the sector as a whole. And when looked at on a relative strength basis vs. the S&P 500, the sector has also not displayed superior relative strength as one might expect. Divergences remain with one example being the cumulative advance-decline for the Nasdaq 100. Yes, the index is flying higher, but it appears to be doing so with fewer stocks. The issue here is that META and NVDA account for almost 70% of this year's gains. Meanwhile, the percentage of stocks above their 50-day moving average have weakened as this indicator has decoupled from the benchmark. But this fact doesn't seem to be bothering portfolio managers who have bought into the trend that is perceived to have no ending. The question that begs to be answered is will asset managers begin to cash in on their gains or continue to press this trade to the long side. At the moment, no one seems concerned about the downside, which is probably why everyone should be. Now while the market may feel a little out of control, your portfolio doesn’t have to be. Armed with the right plan for your accounts, you can navigate the current market volatility with ease using these three free guides from our team at Avalon. In our ebook, Maximize Your 401(k), 403(b), or 457 Plan with Just Four Simple Moves we show you how to quickly ensure you’re doing everything you can to have market-beating returns in your retirement plan accounts. With our second guide, How to Find the Best Financial Advisor for You, we show you how to quickly verify if your advisor is putting your financial interests first – not theirs. Even if you already have a financial advisor, this guide will help you ensure they're the best fit for your needs. finally, if you’re ready to revolutionize your investments, then it’s time to say goodbye to your old, stale 60/40 portfolio. Our guide, The Death of 60/40: Why Old “Tried-and-True” Methods of Investing Are Over, shows you why the old 60/40 methods of investing are over, which new methods are taking their place, and how to make the best choices with your investments moving forward. Start now and make sure all your investments are on the right track by downloading your three [free eBooks]( from Avalon. Simply [go here to sign up]( and we’ll immediately email you your free guides from our report library. You’ll also receive a complimentary subscription to ADAPT where we send you weekly investment tips and ideas to help strengthen your portfolio. Don’t wait to get this important information – getting and staying on track is critical for the future of your wealth and your portfolio. Safe investing, DISCLAIMER: True Market Insiders sent this to you on behalf of a third party, Avalon, a registered investment advisor. Avalon and True Market Insiders are separate entities. Neither company owns the other. Both companies are owned by Chris Rowe. This article is an advertisement to sign up for a free e-letter called ADAPT, which is published by Avalon. True Market Insiders is NOT a registered investment advisor and is not licensed to give advice. True Market Insiders is a financial publishing firm that broadcasts and publishes educational investment material for educational purposes only. 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