Market Update
Market Edge

Market Update for the Week of April 15th, 2024

We Are Making This Week’s Report Free

Federal Hall – 26 Wall Street, New York City

We are Issuing a SELL signal in our investment positions below

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One of the many advantages of your subscription to GaneWisdom/Market Edge is knowing that someone is keeping vigilance over your investment portfolio despite the absence of personal attention. By simply coming to our site, you are able to gather the most up-to-date information that will allow you to personally manage your money, be it a 401k, 403b, IRA, Roth IRA or non-qualified account. We encourage you to review our past performance by scrolling to our Archive section where you’ll find our reviews, guidance, advisement, and results then decide for yourself.

This week saw inflation overtake investors minds, which having digested the fact that inflation is not only stubbornly hanging on but is now affecting the possibility (which a few weeks ago was a probability) of the Federal Reserves stated intention of lowering interest rates.

As noted above we are issuing a SELL signal for certain positions which you will find below. This is due to the narrowing of Market Breadth which we’ve referred to often (which had been strongly positive) these past weeks. Since our guidance is based on analysis and not emotions we prefer to keep as much profit from the investment positions we’ve suggested in the past months and therefore issue BUY signals or SELL signals when appropriate. Having to make up profits due to market downturns is not the way to make money on Wall Street. The wise move is to be proactive and unemotional in your investment strategy – of which our guidance provides. Although we are currently advising to sell certain segments of your portfolio, if our analysis were to suggest going back into them in the future, distant or shortly, we will so advise. This is the definition of being a proactive investor while leaving the ‘herd-mentality’ for others who may be unbothered by losing profits and/or principle.  

The Consumer Price Index (CPI) issued by the Bureau of Labor Statistics, reported that for the month of March the largest rise in consumer prices since September with the inflation rate increasing to 3.5%. Food prices as well as gasoline prices have affected this rate certainly however even without their inclusion core inflation was up 0.4% in March. This is not the news the stock market wants to hear, hence the negative week that ensued.

Guy will have more to say in his Commentary below but for now let’s review the past weeks performance.

S&P 500 (stockcharts.com)

This week saw the S&P 500 fall by 1.65% closing Friday at 5,123

Dow Jones Industrial Average (stockcharts.com)

The Dow closed Friday at 37,983 down 2.54% for the week.

NASDAQ (stockcharts.com)

The Nasdaq closed Friday at 16,175, down slightly at 0.48%

Russell 2000 (stockcharts.com)

The Russell 2000 closed the week out, down 3.52% and landing at 2.003 on Friday.

2 – Year Treasury (stockcharts.com)

Treasuries resume their march upwards this week with the 2-year Treasury closing at 4.89%. The 5-year at 4.55% and the 10-year at 4.52%

Volatility Index (stockcharts.com)

Closing this dismal week on Wall Street, the Volatility Index crept up to 17.31. As our readers know, when the VIX hits 20 and above, investors are becoming restless. 30 and above fear and 40 and above an outright panic.

30 – Year Mortgages (stockcharts.com)

The national rate of a fixed 30-year mortgage landed at 6.88% Friday. Look for this rate to continue to march north as Treasuries continue to increase their yield.

West Texas Intermediate Crude Oil (stockcharts.com)

Friday, West Texas Crude closed at $85.02/barrel. Look for WTIC to hover between $84.00 and $86.00 this week. As unrest in the Middle East continues to evolve we may likely see hefty increases short term. Keep in mind that this is the time of year when gas prices increase due to the winter blends. Within a few weeks refiners will be switching to summer-blend gasoline and the prices should moderate. However, as you’ll read below turmoil overseas could upend that prognosis.

Commentary

Wall Street did not have a good week. To say the least.

As you know, I have been counting on a market pullback where a degree of profit taking would be a healthy thing. I am still very much of that opinion. This week’s downturn WAS NOT due to profit taking nor was it a meltdown either, however, the reasons for this week’s negative effect on the major indexes was rooted in global issues and unwelcome inflation numbers. Let’s take a look.

Over these last months I have expressed a strong opinion, that being on the economy in relation to the upcoming election. Since I follow a variety of indicators, not the least of which are relative to consumer sentiment, it is obvious (at this point in time) that the economy is of most importance to the average American household. Inflation remains stubborn at 3% +. The Federal Reserve has been clear that their target of inflation is 2%. These last few months have signaled strong employment numbers and as you know this is the part where good news can be bad news. At least for those investing in stocks. In essence, the more people that are working, the more that people will be spending which can cause prices to increase. In other words: inflate!

Added to this is the ongoing turmoil in the world. Ukraine (as of this writing) is barely withstanding the latest Russian onslaught due to shortages of air defense armament, ammunition, and various other military aid – much of which has until now been supplied by the U.S. As Congress uses partisan politics to accomplish nothing – the least of which is aid to Ukraine – that country will be doomed to become part of Putin’s ‘Russian Empire’ once again. How certain American politicians can sing praise for Putin and his gang of cutthroats eludes me, but I digress.

As I am preparing this week’s commentary, Iran last night sent hundreds of drones to attack Israel. Given that the combined forces of Israel and the United States were able to shoot down all but a few of these, thereby preventing what could have developed (while praying this indeed does not occur) into a major conflict between Iran and Israel. So far Israel, with ‘encouragement’ from the White House has not retaliated. That said, there are several flashpoints worldwide that will impact the global economy – China/Taiwan, Russia/NATO and the aforementioned Iran/Israel conflict are just several that come to mind. Should any of these disputes erupt into ongoing military hostilities, the effects will be felt immediately.

The University of Michigan publishes a monthly report known as the Consumer Sentiment Index (CSI). This report, which appears each month, releases the results of 500 random telephone interviews of how Americans feel about the economy. This month’s survey found that that sentiment has remained steady, meaning that the past few have shown consumers are not feeling any better about the economy but no worse either. Joanne Hsu, the university’s Survey of Consumers director observed, “Overall, consumers are reserving judgement about the economy in light of the upcoming election, which, in the view of many consumers, could have a substantial impact on the trajectory of the economy.”

In December many investors were convinced – encouraged actually by the backroom Gurus at the major brokerage houses – that the Federal Reserve would cut rates beginning in March. Additionally, the prevailing narrative then was to expect six rate reductions throughout 2024. Although we did not hold to that ‘hope’ - and in fact cautioned against expecting such to occur – January’s Consumer Price Index (CPI) confirmed our misgivings and saw the market take a significant downturn the first week of the new year with the S&P 500 losing 1.52% and the Nasdaq down 3.25%. Interestingly the 2-year Treasuries stood at 4.40%, the 5-year at 4.01% and the 10-year at 4.05% that same week.  Compare the current Treasury Bond yields above and you’ll observe quite a divergence from current yields.

The CPI for February came in with an inflation rate of 3.2%, higher than a year ago but when the March report was released on Wednesday, it saw a 3.5% rate, an increase quite above what economists were forecasting, hence a contributor to this week’s selloff. Consequently, the markets nosedived Wednesday, recovered a bit on Thursday and finished Friday with a 475-point loss on the Dow and a 75-point loss on the S&P 500.

Although I believed that interest rates would begin heading down by mid-year, I recently am seeing signals (and I hesitate to say this) that not only won’t they be reduced but, could in fact, increase!  As our subscribers are aware, we announce the good with the bad and in the interest of full disclosure I am mentioning this here. I do not mean to convey that the rates will not be lowered this year – indeed I see indications they will as well, however only twice – mid-year and in the fall, after the election, but I believe that there are other interests at work behind the scenes so to speak. The outlook should become more evident in the next 60 – 90 days.

 As I wrote last week, the price of Gold has been growing exponentially since the start of the new year. Why, when the markets and economy are strong year to date, can this happen? Gold prices can be (and generally are) very volatile and yet we are seeing these prices power ahead. Since Gold is considered a ‘Safe-Haven’ investment during volatile times and despite this year’s positive market performance, it is signaling a perhaps world-changing development might well be afoot.

Because of higher food prices and a fairly significant increase in gasoline prices, President Biden is having to deal with two issues of great importance to American consumers and unless he can 1.) rein in these price increases and 2.) convince Americans that he has a handle on solutions to do so, the next few months will be spent overcoming challenges instead of offering visions of a bright future. Donald Trump meanwhile will be dealing with the ‘Hush Money’ problem this week and what discoveries that will come from the court proceedings will play heavily with voters, especially the independents who, in the end, will decide the next election.

During this very unsettled, even unstable time period, please be assured that GaneWisdom/Market Edge will continue to be vigilant, informing and updating you immediately to any developments globally, nationally, and financially as well.

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 37,983. The S&P 500 at 5,123.

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 nineteen 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 21% + 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:

We currently are/or were positioned in the following:EnteredExitProfit/Loss
A portfolio consisting primarily of Consumer Products11/6/234/11/24+0.8%
A portfolio consisting primarily of NASDAQ – dominated stocks11/9/23
A portfolio consisting primarily of S&P 500 (Large Cap) stocks11/9/234/15/24unk*
A portfolio consisting primarily of Financial stocks11/9/234/15/24unk*
A portfolio consisting primarily of Small Cap stocks2/2/244/15/24unk*
A portfolio consisting primarily of Technology stocks1/22/24
A portfolio consisting primarily of electronic stocks1/23/24
A portfolio consisting primarily of Banking stocks2/2/24
A portfolio consisting primarily of Retailing stocks2/2/244/11/24+9.7%

* These results are unknown at the time of this writing on Sunday, April 14, 2024. We will publish these numbers in our next Market Update.

We are issuing a SELL signal for portfolios consisting primarily of the following:

S&P 500 (Large Cap) stocks

Financial stocks

Small Cap stocks

Transfer 100% of these dollars into Cash (Money Market) before the close of business on Monday,
April 15th, 2024

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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