My colleague Dr. Joe Duarte is one of the smartest investment analysts I know. He’s also a witty fellow. When a major market event is breaking on financial news, Dr. Duarte and I often engage in an amusing but substantive repartee in “real time” on Slack.

Below, I’ll share with you the good doctor’s Slack message, sent to me on Tuesday afternoon, that’s a blunt assessment of Federal Reserve Chair Jerome Powell’s comments that day.

During a public interview Tuesday at the Economic Club of Washington, DC, Powell uttered comments that stirred sharp volatility in the markets.

Powell at first said: “The disinflationary process, the process of getting inflation down, has begun and it’s begun in the goods sector. But it has a long way to go. These are the very early stages of disinflation.” Stocks popped higher on those words. But then Powell added:

“The reality is we’re going to react to the data. So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have do more and raise rates more than is priced in.” At which point, stocks sank.

The major U.S. stock market indices eventually closed higher Tuesday, after taking an intraday round-trip from green to red and back to green.

However, mixed fourth-quarter earnings results continue to whipsaw investors. The equity indices closed lower Wednesday as follows:

• DJIA: -0.61%
• S&P 500: -1.11%
• NASDAQ: -1.68%
• Russell 2000: -1.52%

On a macro level, the interpretation of Powell’s latest remarks is that the Fed is on the cusp of easing the tightening cycle and will pause its rate hikes later this year.

The bull case remains intact…

Here’s what Dr. Duarte wrote to me on Slack during Powell’s televised discussion:

I only have two things to say: 1) Somebody get Greenspan back in there somehow!! Please!!! 2) On a more realistic take, you have to hand it to Powell, whose every utterance is confusing to the machine traders whose programs compel them to react to key words in statements by people who can make things happen. The guy deserves an attaboy just because he’s making the machines twerk. To be honest, none of this changes my stance on the market for now. As long as the New York Stock Exchange Advance Decline line (NYAD) and the S&P 500 hold above their 200-day moving averages, the bulls get the benefit of the doubt.

I concur with Joe that key technical indicators are bullish, as my Mind Over Markets column on Tuesday made clear.

Fact is, the Fed has been strongly suggesting lately that it will soon take its foot off the brake. Wall Street is betting that the central bank will hike rates by another 0.25% in March and then pause to reassess the state of the economy and inflation.

History shows that new bull markets are born when rate hikes cease. Don’t get caught flat-footed. There’s a compelling argument for increasing your exposure to the stocks on your wish list, especially in the technology sector.

How to play the tech sector rebound…

When we’ve put inflation and rate hikes behind us, certain innovative companies will explode on the upside. Which brings me, once again, to my colleague Dr. Joe Duarte.

Dr. Duarte (pictured) has been a professional investor and independent analyst since 1990. He is a former registered investment advisor and author of the bestselling Options Trading for Dummies, and several other books including Market Timing for Dummies and Successful Biotech Investing.

Dr. Duarte is the chief investment strategist of our premium trading services, Profit Catalyst Alert and Weekly Cash Machine.

He’s also a practicing physician with a thriving medical practice. Think of him as your “investment doctor.”

In a new report, Dr. Duarte pinpoints a groundbreaking tech disruption worth $75 trillion…and it all starts with one under-the-radar $3 stock.

This investment opportunity in the tech sector is poised for market-crushing gains in 2023. Learn more by clicking here.

John Persinos is the editorial director of Investing Daily.

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