Market Update
Market Edge

Market Update for the Week of June 24th, 2024

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As the month comes to a close, we will be heading into the final trading week of the quarter as well as the end of the first half of 2024. So far this year we have witnessed numerous market records from the S&P 500, the Nasdaq and the Dow. Friday will produce the Federal Reserve’s preferred inflation gauge: the Personal Consumption Expenditures (PCE) price index. This is an inflation measure and should show prices on a ‘core’ basis (excluding food and energy) which rose last month by 0.1%. This number would mark the slowest monthly rise since last November. On an annual basis the core PCE should jump fairly close to 2.6% which will be the least increase since March of 2021. It appears that the belt tightening by the Fed these past two years are now showing results.

Before we go any further, let’s see what transpired on Wall Street this past week……….

S&P 500 (stockcharts.com)

This week saw the S&P 500 close at 5,464 and for the past month up 2.69%

Dow Jones Industrial Average (stockcharts.com)

Friday the DJIA closed at 39,150 up 600+ points since last Friday’s close.

NASDAQ (stockcharts.com)

The Nasdaq closed one point higher than the previous Friday when it stood at 17,688. Friday’s close was 17,689! Just one point! For the past month the Nasdaq was up 5.09%

Russell 2000 (stockcharts.com)

For a sustained Bull rally, the Small Cap market must participate. It hasn’t. Although up 20 points from the previous Friday’s close, Small Caps have not performed as they should in an up market. Friday the Russell 2000 closed at 2,022 and for the past month is down 3.64%. We use the Rydex Funds chart for the Russell 2000 due to continuing issues between Stock Charts and the reporting agency. There is a concerning trend forming in the Small Cap market and Guy will explain it below.

2 – Year Treasury (stockcharts.com)

2-year Treasuries closed at 4.75% Friday. 5-year Treasuries at 4.27% and 10-year Treasuries at 4.26%

Volatility Index (stockcharts.com)

The Volitilty Index continues to show investor ease despite the growing feeling that the markets may be nearing the finish line on the current rally. Any number below 20 indicates investor confidence. 20 and above growing concerns about the market. 30 and above fear and 40 and above a full-blown panic. We’re nowhere near that feeling.

30 – Year Mortgages (stockcharts.com)

The national average 30-year fixed mortgage came in at 6.87%, down from the previous week which was at 6.95%. Until a meaningful drop in interest rate, we are likely not going to see much activity in the home-buying market. For those with low mortgages who are reluctant to sell, then move into a higher rate combined with a dearth of available homes have made a scarce buying opportunity for many.

West Texas Intermediate Crude Oil (stockcharts.com)

A barrel of West Texas Intermediate Crude Oil closed Friday at $80.73. Normally gas prices drop right after Memorial Day due to the refineries switching to their summer-blends. This has not been seen yet and based on our research, doesn’t look to be in the cards over the coming weeks. We see the prices of WTIC falling between $78.90 and $83.00 this upcoming week.

Commentary

It is becoming obvious to me that we are beginning to run out of steam with the current rally. Although the markets saw records achieved once again this past week in the S&P 500 and the Nasdaq, market breadth which I’ve written about in these past issues, is beginning to soften.

The S&P 500, which closed Friday at 5,464, is holding just north of its 50-day Moving Average (MA) and should we see a tick below that MA number (5,232), a selloff should be forthcoming.

Over these past months I’ve referred to the Small Cap market as the ’Canary in the Coal Mine’ signaling the broader market’s direction. When Small Caps are flying, you’ll usually see the S&P 500 and Dow soar along with it. Generally, the Nasdaq as well. Conversely, when Small Caps go the other way, the other markets will usually do the same. This is another concern of mine for the short-term indexes. By reading the chart above – the Rydex Russell 2000 – you’ll notice that the 50-day Moving Average stands at 49.44. However, the chart shows this Rydex fund closing at 49.16 Friday. This is a bearish signal, and I won’t be surprised to see the markets begin a slide downward very soon.

The election this year and the effect it will have on the overall economy and markets cannot be overstated. We have two diametrically opposed candidates (to say the least) and the way they view the country, world and (I suppose) life in general is going to have far-reaching consequences regardless of who is elected. On Thursday (6/27/24) the two candidates will be on the same stage giving their views. As an investor it will be well worth your time to tune in.

This upcoming week’s economic news is shaping up to be a strong indicator of the short-term trajectory of the markets. Perhaps longer than short term. Based with that knowledge I will wait for the week’s events to play out and write about them, and more, next week!

Have a blessed and prosperous week………

Guy W. Gane, Jr.

From Market Update for January 1st, 2024 

“…….As you know, our investment philosophy follows the guidelines used by Guy Gane when he managed many millions of dollars for many thousands of clients. His results placed him among the premier Registered Investment Advisors in the United States for many years.

Periodically we are asked “How are subscribers to GaneWisdom/Market Edge able to enjoy profits without losing money?” The answer is – they don’t! No-one can accurately know when a market top happens, nor when a market bottom will occur. Our philosophy is to take small losses in order to avoid big losses.

Let’s analyze the stock market for the last two years – 2022 and 2023.

2023 has witnessed an extraordinary runup in the S&P 500 (+24%), the Dow Jones (+13%), the Russell 2000 (+17%) and the most impressive – the Nasdaq (+43%).

If you are participating in your company’s 401k or 403b, you most likely have no one giving you guidance as to what to buy, when to transfer or when to sell. Consequently, you probably just leave the money, and continue to deposit into whatever funds you originally started with. Most Financial professionals advise their clients to ‘Buy and Hold’ their investments because ‘the market always comes back, then goes up!’ Sounds logical as well as sounds good! It’s hard to argue that logic, especially this year when the market did indeed ‘Come back’. But is that the end of the story? Not by a country mile……

Had your portfolio been invested in tech stocks, the Nasdaq let’s say, and you just kept the money there because your advisor said that’s the ‘smart move’, 2022 saw your investment lose 33% of its value (the Nasdaq’s performance in 2022). Your $10,000 investment by December 2022 was now worth $6,700.00. But the market came back – up 43% as we’ve seen. Despite this – YOU STILL LOST MONEY!

Why? Let’s look……

$6,700  x 43% = $2,881

$6,700 + $2,881 = $9,581 !

In order to break even – JUST TO BREAK EVEN – the Nasdaq would have had to increase 49.3% !! You still lost money 2023!

As you can read in our Archive section, we have given sound financial guidance throughout the last 16 months which could have minimized these losses and maximized gains.

This dear reader, is the visual result of Buying and Holding……”

Upon Reflection

When we began publishing GaneWisdom/Market Watch on August 21st, 2022, the Dow on the previous business day (8/19/22) stood at 33,706. The S&P 500 ended trading on the same day at 4,228. As we wrote above, Friday’s close for the Dow Jones was 39,150. The S&P 500 at 5,464.

Having to give back profits, then having to make them back up instead of profiting by building on profits is not the way to win on Wall Street. This is the ‘Buy and Hold’ strategy. Realistically this is the ‘Buy and Hope’ theory.                                                                                                     

Our subscribers have averaged meaningful positive returns and by following our column exited the markets and re-entered them when appropriate – while the Buy and Hold crowd hung on with white knuckles hoping the market would come back and make up what they lost. The current market has offered significant trading opportunities which we’ve taken advantage of throughout the past twenty-two months (please refer to the “Archive” Section of our site). We are listing our current positions below. Our market strategy has been taking advantage of upward trends, the advantage being not having to make up for the large losses that can (often) occur in the Buy and Hold strategy. When (not if) the market shifts again, we will issue our analysis, guidance and suggestions at that time.

Our Commitment

When GaneWisdom/Market Edge went live in August 2022, the goal was to provide our subscribers top-tier market analysis and outlook to those with qualified accounts such as: IRAs, ROTH IRAs, 401Ks, and 403Bs. Our desire was to make this service affordable to anyone. Instead of paying thousands of dollars, or a percentage based on investment assets (which is how Guy managed his client’s money as a Registered Investment Advisor) GaneWisdom/Market Edge charges a very affordable $200 per year. Our subscribers now include those with non-qualified accounts as well as financial professionals.                 

Our market analysis consists of market indicators, trends and strategies which allow our followers to avoid large losses usually associated with the traditional ‘Buy and Hold’ method. Our results speak for themselves and each of our Posts since our inauguration are available under the site’s heading: ‘Archive’.

In Conclusion

As a subscriber to GaneWisdom/Market Edge you are being given unequalled access to the latest and most comprehensive market analysis available. Please note the following and move accordingly. We strongly caution moving into an equity position in the middle of a market rally, as we are in right now. This could lead to severe losses – ‘Buying high, selling low’ – is not wise. This is especially true for this current rally – this past week notwithstanding - where the S&P 500 has increased 24 + % since late October. Please watch for our Mid-Week Market Alerts in the event of shifting market conditions.

Wishing, hoping, If only’s and what if’s are based on emotion and you know that we follow the numbers, the indexes, the trend, the fundamentals - not emotions.

Our current positions:

(As of 6/21/24)

We currently are/or were positioned in the following:   EnteredExit  Profit/Loss

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Your particular Mutual Funds and/or Variable Annuities may or may not offer all or any of the positions we recommend from time to time. You MUST do your homework. Doing so and finding the portfolio in accordance with the our analysis may position you to take advantage of what we believe to be the next market rally or opportunity.

* As is the case with any investment, use your discretion and judgement before purchasing and/or transferring. Diversification is always prudent; therefore, our suggestion is using a portion of your portfolio and not the total in any one fund or subaccount. A portion should remain in Cash (Money Markets)

Please watch for our Mid-week Market Alerts should there be any

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