Market Update
Market Edge

Market Update for the Week of April 8th, 2024

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 38,904. The S&P 500 at 5,204.

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

We are making this week’s report free

Although this week saw the three major index averages decline for the week, there is still a strong upward trend on Wall Street. Looking at the S&P 500 chart below will verify that the index remains above its 50-day Moving Average (MA) and as well as its 200-day MA. These are healthy signs of a continued rise. We saw a bit of profit taking however not enough to garner a true confirmation of a shift in market breadth. Over two thirds of Large Cap stocks are trading above their MA as well. Another positive sign of bullish sentiment. Below are the final numbers of the week just past…………….

S&P 500 (stockcharts.com)

Friday the S&P 500 rallied after a disappointing week, however, not enough to salvage the price drop of the previous sessions. Friday’s close was 5,204, down 0.95% for the week.

Dow Jones Industrial Average (stockcharts.com)

After dropping 530 points on Thursday (its biggest daily drop since March 2023), the DJIA rebounded somewhat on Friday, gaining 307 points to close at 38,904 however still posting a loss for the week of 2.27%.

NASDAQ (stockcharts.com)

Coming off its worst week since March, the Nasdaq closed at 16,248, down 0.80% for the week. Intel, Walgreens Boots Alliance, Lululemon Athletica, Sirius, and Tesla were among its biggest losers.

Russell 2000 (stockcharts.com)

Coming off its worst week since January, the Russell 2000 closed at 2.063, down 2.87% for the week. The above chart reflects the Rydex Russell 2000 due to the issues between Stock Charts, the firm we use for our charting and the reporting agency.

2 – Year Treasury (stockcharts.com)

The current rates on U.S. Treasuries show the 2-year Treasury Bond at 4.75%. 5-year at 4.39% and the 10-year Treasury at 4.40%. These rates reflect an increase in yields over the previous three weeks. Home mortgages will show this upward trend in Treasures within the next two to three weeks.

Volatility Index (stockcharts.com)

The Volatility Index closed Friday at 16.03. Although higher than in the last few weeks due to the gyrations in the markets this week, this is still a healthy sign of investor confidence. A reading of 20 and above would show a growing concern from investors. 30 and above would indicate growing panic and a reading of 40 and above would see investors rushing out the door. We are not at those levels currently.

30 – Year Mortgages (stockcharts.com)

National 30-year Mortgages are beginning to increase due to the higher yields from U.S. Treasury Bonds. Friday’s rate closed at 6.82%. These rates have climbed steadily in the last few weeks and look for a further upward movement near term.

West Texas Intermediate Crude Oil (stockcharts.com)

You’ll recall that in our Market Update dated January 1st, we pointed out the presence of what’s known as a ‘Death Cross’. This is where the 50-day Moving Average (MA) dips below the 200-day MA. A Death Cross generally signals a downward trend in that particular stock, commodity or index. The word here is ‘generally’. As you know by now, no matter how accurate an analyst claims to be, no-one, NO-ONE can predict the stock market with 100% accuracy. A good case in point would be found in the chart above. Although the Death Cross indicated (on December 28th, 2023) that the price of West Texas Intermediate Crude would head south, that did not materialize for long. Now we see that a ‘Golden Cross’ has formed. This signals that the price of WTIC could likely trend upwards. If you are a consumer this is not welcome news, however if you are an investor in WTIC this is great news! Friday saw Texas crude end trading at $86.91/barrel.

As tensions continue to mount in the Middle East and Eastern Europe as well, look for an upward trend in energy prices. This past week saw Israel launch air strikes on Iran’s consulate in Damascus and Iran is vowing retaliation. Look for the cost of WTIC (as well as Brent Crude) to increase, with WTIC to hover between $86 - $90.50 by weeks end.

Commentary

One very important rule that most of us who publish a subscription newsletter such as GaneWisdom/Market Edge where people (investors and financial professionals such as here) pay for data, analysis, advice, guidance, research etc. is to not get involved in politics. Each of us in the United States have some sort of an idea who we like or prefer as a candidate and I try not to let my personal leanings in this area, show. My career in finance has encompassed nine presidential administrations as well as twenty-five Congresses (93rd in 1974, 118th currently). During those years I saw inflation, recessions, banking and mortgage collapses, unbelievable stock market growth and stagflations as well. Over these many years I have been asked under which political party was the best growth in the stock market. This is an especially timely topic given this very contentious election coming up in November. I did more than a bit of research and analysis this week and I thought I’d share what I found………..

As you know I aways refer to the Standard and Poor’s Index – you know it as the S&P 500 – as the best barometer of the market. Unlike the Dow Jones, which encompasses 30 publicly traded companies, the S&P 500 holds 500 companies within its index thereby giving a much more accurate reading on the stock market as a whole. Encompassing eleven different market sectors (Energy, Real Estate, Financials, Health Care, Technology, Materials, Consumer Discretionary, Industrials, Communications, Consumer Staples and Utilities) the S&P 500 accounts for 80% of domestic equities by market capitalization. This past year has seen the S&P 500 advance 30% - an astounding number that does not happen very often. Despite the abundance of negative news about the economy, it really hasn’t done bad! An amazing feat (so far) is a soft landing of the economy where no recession appears, job growth is continuing with strength and interest rates - elevated in order to arrest inflation – are expected to begin lowering in 2024. Food prices and oil/gas prices are the rascals that must be dealt with straightaway.

Since March 1957, which is when the S&P 500 was created, it has increased in value by 11,830%. This time period saw the index compound increase by 7.4% annually. And this number doesn’t include dividends paid out during this time. If it did the return would be higher. Much higher.

The S&P 500’s average annual growth rate since 1957 was 11.4% under a Democratic President and 7% under a Republican President. Please keep in mind this important fact – the president does not control the stock market. They do, however, control fiscal policy (simply put, fiscal policy is the tool that is used to shape the economy through taxes and spending). Congress is responsible for the federal budget. Three events that caused the stock market to crash were not the fault of the president – the Dot-Com Bubble in the early 2000s, the Great Recession in 2008 – 2009 and COVID-19 were the culprits that caused the market-meltdowns. In the coming months we will be inundated with claims and counterclaims consisting of so many topics. One opinion that I will stand by – when voters decide who to cast their ballots for, the economy will likely be foremost on their minds. The caveat that will likely play an important factor in the election will be Donald Trump’s profusion of legal issues and his outcome of guilt or innocence.

This election, as I’ve pointed out repeatedly throughout these posts, is reminiscent of the election of 1860, five months prior to the commencing of the Civil War. It is up to us to decide – unemotionally – who can lead us over the next four years with wisdom and sagacity. It is my belief that this election of 2024 very well may be the most consequential of our lifetimes.

On the Horizon

In my book ‘Managed Money: An Avenue to Wealth’ I wrote at length how I research and analyze financial data. Financial information comes in fast and furious today as the stock market seems to breathlessly wait for the much-anticipated rate reductions by the Federal Reserve. I wrote in Managed Money that there are two types of market analysists – Fundamental Analyst and Technical Analyst. A Fundamental Analyst is one who uses financial and economic data to find the true value of a stock or commodity. A Technical Analyst, which is my method, uses charts, and past historical data to determine which way the market is trending.

Until recently events in the Middle East, specifically the terror attack by Hamas in October against Israel, did not have a major impact on our day-to-day economy here in the U.S. Now, however, it is making its effect felt through escalating oil prices. As I mentioned above, the two factors that impact Americans in a day-to-day and personal way are food prices and gas prices. Both of which have painfully escalated, especially recently. The rally in gold prices, which has broken out of a sideways pattern over the last three years, could indicate (in my opinion a good probability) a rise in value to $2,500 an ounce. Possibly to $2,600 +. Although the S&P 500 has risen 9.3% year-to-date, gold has increased 11.9% in the same time period. Gold prices ebb and flow with prevailing national and geo-political events. When there are growing concerns, gold tends to rise hence its reputation of a being what’s known as a ‘Safe-Haven’. The price increase in this commodity seems to bear out the anxiety prevalent here in this country as well as globally. Friday Gold closed at $2,343/ounce. One year ago, the price stood at $2,034/ounce.

Now please understand I am not advocating transferring your portfolio to gold – the prices which are extremely volatile and not for the faint of heart. I write this to make the point that our world economy is changing and perhaps not for the better. Because of this it is imperative that in order to stay ahead of the curve so to speak, you should work with a financial professional. Or barring that, have an outlet such as we offer at GaneWisdom/Market Edge in which to gather and glean pertinent and current information.

Lastly

Each week my concern increases in respect to the current market and what I believe is becoming ‘overbought’. This term means that the commodity (the stock market in this case) has momentum, price and volume which are showing this market nearing a stage when it should be in a position to let some air out. Like a steam valve, pressure needs to be reduced now and then and if it isn’t it explodes. The market for all intents and purposes has been on an upward trajectory since October 2022. If we don’t see profit taking soon, we could experience a crash – something no-one wants to see (well almost no-one but I don’t want to talk politics here). For now, market breadth (which I’ve explained in previous posts) is strong and continues to signal an upward trend of the market. For now.

When I actively managed my clients accounts as a Registered Investment Advisor, I consistently gathered new clients when the markets were trending downward. Or in a freefall (I’ve seen them all). Although my seminars averaged 240 attendees (lunch seminars every 6-8 weeks) I always saw attendance rise when the markets were not doing well. Why? Because people go to the doctor when they’re sick, not when they’re healthy. The same rule applied when investing. I write this because the stock market will (sadly) eventually take a downward dive. And stay there. Possibly for a while. My advice: take advantage of the trend of the market as they are happening now. Position yourself that when the market does go down you will retain as much of your principle and profit as possible. This objective is what GaneWisdom/Market Edge endeavors to provide.

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 38,904. The S&P 500 at 5,204.

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 – despite this past week we are still experiencing a bull market -  where the S&P 500 has increased 20% + 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 Products11/6/23-1.9%
A portfolio consisting primarily of NASDAQ – dominated stocks11/9/23+19.1%
A portfolio consisting primarily of S&P 500 (Large Cap) stocks11/9/23+29.0%
A portfolio consisting primarily of Financial stocks11/9/23+6.3%
A portfolio consisting primarily of Small Cap stocks2/2/24+7.2%
A portfolio consisting primarily of Biotech stocks11/16/233/20/24+16.5%
A portfolio consisting primarily of Health care stocks11/16/234/5/24+18.1%
A portfolio consisting primarily of Technology stocks1/22/24+7.7%
A portfolio consisting primarily of electronic stocks1/23/24+9.3%
A portfolio consisting primarily of Banking stocks2/2/24+4.0%
A portfolio consisting primarily of Retailing stocks2/2/24+5.7%
A portfolio consisting primarily of Energy stocks2/27/24+10.0%

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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