A Rebound.

Stocks for the most part erased much of last week's losses. I think this is largely because investors are increasingly coming around to the view that the Federal Reserve is almost done raising interest rates & one or two more increases may finish the job. Friday's weaker than expected GDP strengthened this idea.

The stock market rally the last couple of days brings us back near highs the markets made earlier this month. We should now carefully watch to see how equities react next week. The FOMC's interest rate decision due on Tuesday afternoon could clue us in on the markets next direction. A sudden price surge on heavy volume that breaks out to new highs would be longer term positive and could set the stage for much higher prices in the next several months. Likewise, A market that fails at these levels could be in danger of revisiting last week's lows or worse. However, it is more likely that stock prices will need to rest and consolidate this current range. It would not surprise me to see stocks tread water for most of next week. This backing and filling would be healthy and could leave the market poised to then move higher.

One area that could prove to be an attractive area of investment if we are close to the end of this interest rate cycle are the shares of financial institutions*. Many of these companies are well known names & have not really advanced much in the last two years. In addition many of them pay very attractive dividends. Indications that interest rates are done going up could be very beneficial to this group. There are also several ETFs devoted to financial companies that investors can purchase as well.

*Accounts of Lumen Capital Management may own individual securities or ETFs in the above mentioned sector at this time. Please not that positions can & do change from time to time. Purchases and Sales of securities and portfolio holdings varies among Clients of Lumen Capital Management due to their individual portfolio goals and risk parameters. Nothing in this post, past or subsequent postings should be construed as advice to buy or sell any particular security.