The Fed will be able to shrink its holdings | 25 February 2022

#SP500:

The VIX often called Wall Street's "fear gauge,” recently stood at 29, some 11 points higher than its historical median. The S&P 500 is down 9.7% this year after rising 27% in 2021, while yields on the 10-year Treasury are up about 42 basis points year-to-date in anticipation that the Federal Reserve will tighten monetary policy as it fights to tamp down inflation. The S&P 500's price-to-earnings ratio on a forward 12-month basis stands at 25.5, a 38% premium to its 20-year average. This is a negative signal for the U.S. stock market.

Trading recommendation: sell 4444 and take profit 4300.

#NVIDIA:

The company pleased traders with positive financial results. Revenue for the fourth quarter was a record $7.64 billion, up 53 percent from a year ago and up 8 percent sequentially. Record revenue was achieved in Gaming, Data Center, and Professional Visualization for both the quarter and fiscal year. Nearly all desktop NVIDIA Ampere architecture GeForce GPU shipments are Lite Hash Rate to help direct GeForce GPUs to gamers. Data Center revenue was up 71 percent from a year ago and up 11 percent sequentially. Fiscal-year revenue was up 58 percent. NVIDIA’s outlook for the first quarter of fiscal 2023 is as follows: revenue is expected to be $8.10 billion, plus or minus 2 percent. GAAP and non-GAAP gross margins are expected to be 65.2 percent and 67.0 percent, respectively, plus or minus 50 basis points.

Trading recommendation: buy 225.50 and take profit 235.90.

XAGUSD:

The Fed will be able to shrink its holdings substantially primarily by letting securities roll off the balance sheet as they mature. New York Federal Reserve Bank President John Williams said the Fed may consider selling MBS at some point to achieve its goal of moving to a portfolio that invests mainly in Treasury securities, an approach supported by some other Fed officials as well. Williams said he expects real U.S. GDP to grow by slightly less than 3% this year and for the unemployment rate to drop to about 3.5% by the end of the year. He projects personal consumption expenditures price inflation to decline to about 3% and for it to fall further next year as supply challenges improve. This is a negative signal for silver.

Trading recommendation: sell 24.10 and take profit 23.45