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TheStreet Open House

The 'Yellen Effect' Revitalizes Wall Street, for Now

Stock quotes in this article: AAPL, FB, NFLX, XLY, XLU, BLMN, CCJ, UVXY

NEW YORK (TheStreet) -- The "Janet Yellen effect" took hold of Wall Street on Wednesday, again. The DJIA and the S&P 500 both saw nice upside gains. The DJIA finished up 117.52 points to 16518.54 and the S&P finished up 10.49 to 1878.21. The Nasdaq closed down on the day by 13.09 at 4067.67, with the Russell 2000 up fractionally at 1108.55.

This stock market is frustrating many traders and investors alike. A two-tiered market is not a strong stock market. However, this is the current market. That is precisely why this stock market is not for amateurs.

This market is stock-specific. The momentum stocks that every hedge fund and momentum trader was buying earlier this week are now the stocks being sold in the last two days. We are speaking of Apple (AAPL), Facebook (FB) and Netflix (NFLX).

Contrary to what the Federal Reserve chair is saying in testimony, there is huge inflation going on in this economy. The Fed would lead you to believe that inflation is not a problem. I am here to tell you that is not the truth.

The price of oil is soaring along with food prices, most notably wheat, corn, and coffee. If you add the burning dollar to that mix, you have rising inflation.

The American consumer is feeling the direct hit. The Select Sector Consumer Discretionary ETF (XLY) has been in a Trend Bearish mode since March 2014, according to my internal algorithm process.

The Select Sector Utilities ETF (XLU) has been in a Trend Bullish mode since the beginning of 2014. The utilities are one of the biggest gainers in 2014, up 12.4%.

When you combine accelerating inflation with a lower dollar, you have a slowing growth environment. The purchasing power of the American consumer is lowered under those conditions and that is a reason why the XLY is in a Trend Bearish environment. The XLU would not be one of the major indexes leading market returns in 2014 if the economy was growing. The XLU is a leader in a slowing economy as individuals reach for yield. In addition, the 10-year note is in a Trend Bullish environment. That is not a "growth accelerating" signal.

So, I continue to maintain that old Wall Street pundits are missing the slowing growth signals in the economy. It is just a matter of time before the DJIA and the S&P play downside catch up to the Nasdaq and Russell 2000 indexes.

On Wednesday I started a short position in Bloomin' Brands (BLMN) along with a long position in Cameco (CCJ). I also closed out my ProShares Ultra Silver (UVXY) long position from earlier this week with a better than 1% gain. If you would like to learn more about my process visit www.strategicstocktrades.com.

At the time of publication the author was short BLMN and long CCJ.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Read more: Yellen Looks to Not Repeat Bernanke's Blunder

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