Market Update
Market Edge

Market Update for the Week of January 15th, 2024

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.

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

The eBook
Managed Money: An Avenue to Wealth
Available on Amazon

Mid – Week Market Alert for Tuesday, January 16th, 2024

Market Alert: Transfer 100% of your position in a portfolio consisting primarily of to CASH (Money Markets) before the close of business on Tuesday, January 16th, 2024

Mid – Week Market Alert for Thursday, January 18th, 2024

Market Alert: Transfer 100% of your position in a portfolio

This week’s Market Update will be free

The Stock Market Will be Closed on Monday, January 15th, 2024 in observance of Martin Luther King Day

When the CPI (Consumer Price Index) data was released by the Labor Department this week, it signaled that inflation rose a bit in December. The number on Thursday showed a rise of 3.4% in December from 3.1% in November. For a broader definition of the CPI we are attaching an excerpt from Guy’s book ‘Managed Money: An Avenue to Wealth’ (available on Amazon):

This popular measure of price inflation concerning retail goods and services. This report, released by the Bureau of Labor Statistics, is issued at 8:30am in the second or third week of the current month for the previous month. The stock market is very reactive to this data. Sharp increases in the CPI is not very favorable to investors due to these numbers can lead to higher bond rates and a reduction in corporate profits. If there is a threat of inflation the Federal Reserve will begin (or continue) to raise interest rates causing lower corporate profits. The report can be found at: www.bls.gov/cpi/

As you keep reading here, good news is sometimes bad news for the Federal Reserve. This week, less working citizens filed for unemployment which means the labor market continues to be strong, which means that people are spending money, which means the Fed is not going to be inclined to lower rates in the near term!

S&P 500 (stockcharts.com)

Although the S&P 500 lost 1.52% for the week of January 1st, it negated that loss this week by rising 1.84% putting it in positive territory for the year so far. Friday’s close saw the S&P 500 at 4,783. There appears to be muscle left for the S&P 500 near-term.

Dow Jones Industrial Average (stockcharts.com)

The DJIA closed Friday at 37,592, up slightly 0.34% for the week.

NASDAQ (stockcharts.com)

The NASDAQ closed trading Friday at 14,972, up 3.09% for the week. As you can see from the chart above, the NASDAQ Composite is well above it’s 50-day moving average as well as it’s 200-day MA.

Russell 2000 (stockcharts.com)

Using The Rydex Russell 2000 chart, we observed the Russell 2000 index closed down fractionally this week at 1,950, down 0.01% for the week. The Small Cap market, as you’ve read here, is a fairly accurate bell-weather for the broader markets. Given that the NASDAQ had a good week, we will see if this carries through to not only the tech market, but the small Caps as well.

2-Year Treasury (stockcharts.com)

The 2-year Treasury Bond currently sits at its lowest level since mid-May of last year. You will notice the 50-day (blue line) Moving Average has crossed below the 200-day MA (red line). This, as readers know, is known as a ‘Death Cross’. When the Death Cross appears on a chart (and they do infrequently) this is a very strong indication of lower prices or yields, on a specific commodity, security or index. Observe the chart above and you will see the precipitous drop in yield that immediately followed the appearance of the Death Cross. We may be seeing the beginning of the ‘soft landing’ recession fervently hoped-for. Stay tuned. 5-year Treasuries are at 3.83% and the 10-year yielding 3.94%, all three down from last week.

Volatility Index (VIX) (stockcharts.com)

Closing Friday at 12.70, the VIX is signaling little concern or fear from investors currently.

30-Year Mortgage (stockcharts.com)

30-year mortgages spiked a bit this week, closing at 6.66%

West Texas Intermediate Crude Oil (stockcharts.com)

Another Death Cross appeared in the chart above for West Texas Intermediate Crude Oil a few weeks ago on December 27th. Death Crosses almost always mean a downturn in that commodity, security or index. This is what happened as you can see. HOWEVER oil prices surged after the U.S. and U.K. carried out attacks on the Iran-backed Houthi rebels in Yemen last week. West Texas Intermediate Crude Oil is tightly linked to the gas prices in the U.S. Friday WTIC closed at $72.68 per barrel, down a bit from our projection last week of a Barrel of WTIC landing between $75.00 and $78.00. This week we are forecasting a price range between $71 and $75/bbl.

Brent crude contracts for March delivery, the global pricing benchmark, were last seen trading $3.16 higher heading into the New York session and changing hands at $80.60 per barrel.

WTI contracts for February delivery, which are more tightly linked to U.S. gasoline prices, jumped $3.05 to $75.07 per barrel.

Commentary

One of my fears for investors has been, and continues to be, that of (to quote former Fed Chairman Alan Greenspan) “Over-exuberance”. Many investors were encouraged by the back-office Soothsayers at the major brokerage houses touting the expectation that the Federal Reserve would begin lowering interest rates this March. We, as you’ve continuously read in our weekly Market Updates, never has been our contention. Urging caution, our projection continues to be late spring. Probably June. IF world - as well as domestic - events do not intervene. Thursday’s inflation report suggested that there are still too many pressures preventing the Fed from lowering rates due to its rock-solid intention of bringing the inflation rate to 2%. Although we are seeing the yields on Treasuries dropping a bit, Thursday’s report may add pressure for the Fed to keep rates elevated over the near term. We will know more in the coming weeks as the fourth-quarter earnings are reported as well as the outlook for this first-quarter profits.

Events in the Middle East continue to ratchet up despite the U.S. and its partner’s efforts to contain the fire. Houthi rebels from Yemen continue to target shipping in the Gulf of Oman as well as the Red Sea. President Biden declared that “These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation.” Because of these concerns, Brent crude oil contracts (the global alignment for oil) for March delivery headed higher - $80.60/bbl. As you know, the West Texas Intermediate crude is more tightly linked to our domestic prices, however even these prices have stalled – despite the appearance a few weeks ago of the infamous ‘Death Cross’. It seems that in some areas of the U.S. gas retailers are not only NOT conforming with the WTIC price reduction but in fact raising prices to take advantage of the unsuspecting, all while attributing these increases as Mid East related.

This week begins the primary process in the U.S. For the next ten months we will be overloaded with recriminations, slander, accusations and legal results in what has already become the most disturbing and contentious presidential election since 1860. This, dear readers, will not become better but very likely much worse. I continue to strongly believe that much of what will happen on November 5th, 2024, will be the results of the state of the economy. If people are satisfied (if not happy) with their standard of living at that time, the incumbent will likely be elected. If not, the contender likely will be. World events will certainly be waiting in the wings (if not have already taken center stage) so a prognosis on this election is still very much premature. Suffice to say that this will be an election the like of which any living American has never experienced.

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 37,592. The S&P 500 at 4,783. Any profit you made in the market runup of 2023 – the previous ten weeks notwithstanding - has perhaps not been as great as it would have otherwise. Please see above. 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.

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 stock11/16/23

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.

The eBook

Managed Money: An Avenue to Wealth

Available on Amazon

Mid – Week Market Alert for Tuesday, January 16th, 2024

Market Alert: Transfer 100% of your position in a portfolio consisting primarily of

Entry DateSince Entry
1. A portfolio consisting of Construction stocks11/3/23+4.1%
2. A portfolio consisting of Leisure stocks11/9/23+7.5%
3. A portfolio consisting of Leisure stocks11/9/23+13.8%
4. A portfolio consisting of Transportation stocks11/16/23+3.5%

into CASH (Money Markets) before the close of business on Tuesday, January 16th, 2024

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 modest portion of your portfolio and not the total.

Mid – Week Market Alert for Thursday, January 18th, 2024

Market Alert: Transfer 100% of your position in a portfolio consisting primarily of

Entry DateSince Entry
A portfolio consisting of Banking11/9/2319.3%

into CASH (Money Markets) before the close of business on Thursday, January 18th, 2024

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 modest portion of your portfolio and not the total.

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