Market Update
Market Edge

Market Update for the Week of December 25th, 2023

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.

Wishing you and your family a Successful and Happy New Year

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

Mid-Week Market Alert for Thursday, December 28th, 2023

As a subscriber you know that our method of market guidance is performed through the use of statistical analysis. This method is at the basis of our interpretation of the data that is presented to publicly traded commodities. This is called Technical Analysis.

We are offering this week’s Market Update for free

Santa Claus would have been excused this past Wednesday if he had called into question the market’s current rally named after him. Wednesday, the S&P 500 dropped @1.5%, the NASDAQ fell 1.5% and the Small Caps dropped 1.5% as well. The Dow closed down 475. Thursday and Friday, however, kept Santa on his sleigh as the current rally continued, reversing the mid-week’s losses.

As the charts below indicate, there are not a lot of new stories to announce as the Dow and the S&P 500 remained relatively the way they were left on December 15th.

S&P 500 (stockcharts.com)

This week the S&P 500 was a bit flat. Closing the week at 4,754, the S&P 500 was up a modest 0.75%

Dow Jones Industrial Average (stockcharts.com)

The Dow closed at 37,385, up 0.22% for the week

NASDAQ (stockcharts.com)

Closing the week at 14,992, the tech heavy NASDAQ ended the week up 1.21%

Rydex Russell 2000 (stockcharts.com)

Using the chart for the Rydex Russell 2000 above to illustrate the positive performance of the Small Cap market, the Russell 2000 was up a robust 2.46% for the week, closing at 2,033. As we frequently point out, for the markets to advance, the Small Caps need to lead the way. This week they signaled that this current rally may not be over.

2-Year Treasury Bonds (stockcharts.com)

2-year Treasury Bonds ended the week at 4.31%, 5-year Treasuries at 3.87% and 10-year Bonds at 3.89%. Each of the past few weeks has seen a downward trend in Government obligations which is a positive sign that a modest recession may be in the offing. Time will tell.

Volatility Index (VIX) (stockcharts.com)

The major sell-off scared many investors on Wednesday. Although the markets rebounded on Thursday and Friday, investors were still a bit timid by week’s end. The VIX ended Friday’s trading at 13.03 up from the previous few weeks when on 12/8 the VIX ended at 12.36 and on 12/15, 12.28. We are not near the number 20 where many investors begin to take careful notice. 30 and above begins the search for the nearest door just in case and 40 and above investors begin scrambling for the nearest exit. We are plainly nowhere near those numbers.

30-Year Mortgage (stockcharts.com)

Nationally, the 30-year mortgage rates have now landed a bit lower at 6.67%. This marks the eighth week in a row that rates have dropped.

West Texas Intermediate Crude (stockcharts.com)

Oil was up a bit for the week, closing at $73.56 per barrel. Rising for three days this week, by the end of the week they had stabilized downward. Look for West Texas crude’s prices to hover between $73.00 and $75.50 this week. Expect to see a possible rise of 2 – 3 cents a gallon at the pumps by weeks end.

Commentary

If you were a new investor in October 2022, you likely thought that perhaps it would have been wiser to put the money under your mattress. Maybe in a can buried in the back yard. The S&P 500 fell 18% as the Federal Reserve continued to raise rates from zero to over 5%. This year, even with the low expectations that most economists envisioned, saw the S&P 500 up 23.8% on the year – and we still have another four trading days to go!!

The NASDAQ is up 43.3%. The Dow up 23.8% and just in November and December we see the Russell 2000 up 12.4%.

Inflation has been brought down from 9% last year and is now hovering at 3%. Oil prices have fallen dramatically with gas prices down nearly 20% since September. Currently there is some bit of optimism that the Fed will begin lowering rates in March. My view however is that this will not happen that quickly. My analysis leads me to think this will transpire in June.

Now let’s get a bit sober here………

There are more than a few respected handfuls of economists and analysts who are not quite so optimistic concerning the stock market heading into the new year. JP Morgan analysts for instance predict the S&P 500 tumbling more than 11% next year. There is a bit of logic here. Let me explain…….

If you were to look at the performance of some of the leading stocks you would notice that (in plain and understandable English) they were very responsible for the outstanding performance we’ve seen in the market – Alphabet (Google’s parent company) Apple, Amazon, Meta (FB’s parent company), Microsoft, Nvidia and Tesla. All told this group is up (collectively) an astounding 111.6% year-to-date! Had this group of companies not been included in the market indexes we would have seen the S&P 500 average a bit north of 9%. Not too shabby but nowhere near the outstanding performances we’ve seen.

You MUST position yourself as events – as well as opportunities – present themselves and this is where the guidance of a true money manager who provides active advice and direction is not only nice, but imperative. This is what GaneWisdom/Market Edge furnishes.

We’ve been fortunate, as I’ve pointed out previously, that the turmoil going on in the Middle East and in Ukraine has not driven energy prices up. However, where do things head as the U.S. pulls the plug on aid to Ukraine? One only has to review history to see that Russia has a propensity of throwing the vast numbers of soldiers under its command into machine gun fire and artillery barrages with no regard for their lives (please see WW I and WW II). Israel is being ‘encouraged’ to draw back it’s initiative in Gaza (not for nothing but could you see the United States ‘drawing back’ from the country, region or people that killed 1,400 U.S. citizens? But I digress). What about China and Taiwan? Will the CCP allow the stalemate between the two nations to go on indefinitely? Rational thinking would lead one to say no.

And then……………..

November 5th, 2024 – Election Day will be here before we know it. My gut tells me that things will not stay as they now seem. No matter what party or what candidate wins, however, there will be far more than disappointed losers and gracious winners. I strongly recommend that you mentally (if not spiritually and emotionally) prepare for the cataclysm that will transpire. This dear reader is not ‘if’ or ‘maybe’ by the way. It is imperative that you take an active interest in your investment portfolio - regardless of how small – as the markets will be directly affected. Since I can only guide you financially, please continue reading the following – carefully.

Guy W. Gane, Jr.

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 37,385. The S&P 500 at 4,754. Any profit you made in the market runup of 2023 – the past eight weeks notwithstanding - has perhaps not been as great as it would have otherwise. 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’ theory. 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 year (please refer to the “Archive” Section of our site). We are listing our current positions below. Our market strategy has been taking advantage of this upward trend, the advantage being not having to make up for the large losses of several months ago. When (not if) the market shifts once more, 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 (as of this writing) where the S&P 500 has increased 15% + 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.

Wishing you and your family a Successful and Happy New Year

Our current positions:

We are positioned in the following:Entered
A portfolio consisting primarily of Utilities11/3/23
A portfolio consisting primarily of Construction Material and Products11/3/23
A portfolio consisting primarily of Consumer Products11/6/23
A portfolio consisting primarily of NASDAQ – dominated stocks11/9/23
A portfolio consisting primarily of Leisure stocks11/9/23
A portfolio consisting primarily of S&P 500 (Large Cap) stocks11/9/23
A portfolio consisting primarily of Financial stocks11/9/23
A portfolio consisting primarily of Banking stocks11/9/23
A portfolio consisting primarily of Retailing stocks11/9/23
A portfolio consisting primarily of Telecom stocks11/9/23
A portfolio consisting primarily of Small Cap stocks11/14/23
A portfolio consisting primarily of Biotech stocks11/16/23
A portfolio consisting primarily of Health care stocks11/16/23
A portfolio consisting primarily of Transportation stocks11/16/23

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.

* 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.

Mid-Week Market Alert for Thursday, December 28th, 2023

As a subscriber you know that our method of market guidance is performed through the use of statistical analysis. This method is at the basis of our interpretation of the data that is presented to publicly traded commodities. This is called Technical Analysis.

We look for trend lines which can appear through the charts you see each week in our Weekly Market Updates. Of course, there is much more analysis that has taken place before you are given our suggestions through our ‘Positions’ section each week but there are, at times, glaring indicators that signal a major shift in a particular sector or commodity. We have just today (12/27/23) observed one.

We frequently refer to what are known as ‘Crosses’. A Golden Cross will signal a long-term advancement in that security, sector etc. A Death Cross is the opposite and one investors are not excited to see. This signals a downward trend. These crosses occur when the 50-day Moving Average crosses over the 200-day Moving Average. The 50-day MA crossing over and above the 200-day MA signals a Golden Cross. This is a very Bullish signal. The 50-day MA crossing below the 200-day MA becomes a Death Cross. This is a very Bearish signal.

West Texas Intermediate Crude Oil, which we follow weekly, today (12/27/23) has formed a Death Cross.

West Texas Intermediate Crude Oil (stockcharts.com)

Please note the Golden Cross that took place in August (above) and the results of oil prices.

On February 25th, 2020 when this same scenario appeared, crude oil declined to $49.90. Three weeks later crude closed at $32.98. Two months after the Death Cross appeared that February, crude oil closed at $12.78.

Interpretation:

Look for gas prices to decline in the coming weeks.


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