Although we always stress that investing or repositioning money in the stock market based on emotions is not very wise, that doesn’t mean that we don’t do some ‘wondering’ ourselves. We do however, continue to adhere to the strategies that we’ve developed over many years. Once again, we see the wisdom in doing so as our subscribers are now realizing a very conservative 6% return on their money as our past Postings will bear.
As we’ve observed a few weeks ago, the S&P 500 hit the magic number of 4,300 which signaled the end of the Bear Market of the past year and a half. For quite a while, our cautionary tale of realizing a ‘Panic Bottom’ where the floor dropped out from the S&P 500 and investor then throw in the towel, thankfully did not occur. That Panic Bottom, as our readers recall, was projected to be when the S&P 500 fell to @3,300. Happily, that did not come to pass.
Does this mean that we will not see more turmoil in the weeks and months ahead? Hardly. The good news is that by following the guidance offered here at GaneWisdom/Market Edge will keep you abreast of changes when they occur. We do so through our Weekly Market Updates and more immediately through our Mid-Week Market Alerts if needed.
Single-family home sales have jumped 12.2% month-over-month to an annualized seasonally adjusted figure of 763,000 in May. This level is the highest since early in 2022. Forecasters expected an increase of 675,000 but this is great news for the housing market as well as for the economy. Applications for mortgages rose 3% this past week, while buying a new home rose by 2.8% and re-fis rose by 3.3%.
US manufactured durable goods (Those manufactured products that are capable of lasting more than three years-e.g., Cars, refrigerators, etc.) increased by 1.7% in May which was an increase from April of 1.2% in April. Another healthy sign for the economy, which saw an annual increase of 2% in the first quarter. People are spending money as well up $52 billion in spending services (this is money spent by individuals and households for personal use).
Stocks rallied late in the week due to investor’s hopes that there will be an easing on rising interest rates. This optimism was based on a reduction of May’s rate of inflation which stood at 3.8% down from 4% previously. Fed Chairman Jerome Powell stated that at least two more rate hikes are likely. From our viewpoint, we believe the next increase will happen at this month’s Fed meeting. Look for a ¼% increase.
For the week: the S&P 500 closed at 4,450 + 2.84%, the DJIA closed at 34,407 +2.02%, the NASDAQ 13,787 + 2/19%. A good indicator of a continuation of a market upswing comes from the Small Cap markets which this week’s Russell 2000 which gained 3.68% closing at 1,888 on Friday.
Oil stands at $70.45 per barrel, Gold $1,927, and Silver $22.98.
Investors are not concerned based on the Cboe Volatility Index (VIX) which stands at 13.59. Remember when the VIX hovers near 30 there is concern about the markets. Near or at 40 is a panic. Obviously, we are nowhere near that presently.
The Markets are closed July 4th in observance of Independence Day
There are many reasons for optimism concerning the stock market’s current Bull Market as we’ve pointed out above, yet from here we are a bit concerned due to the continued Inverted Yield Curve. This IYC has stood steady for months and as we’ve also pointed out an IYC usually indicates a recession ahead. The yield on Government bonds stands currently at 10-year – 3.84%, 5-year – 4.16% and 2-year – 4.90%. We feel a bit uneasy about the economy however those who follow our posts know that we will continue to follow market indicators and trends, and should they reverse from the present course, we will be there signaling the best route to take with your investments.
Our current positions:
- S&P 500 loaded mutual fund or S&P 500 ETF
- A portfolio consisting of Financial Services.
- a portfolio consisting of Leisure goods and/or services.
- a portfolio consisting of Telecommunications.
Please watch for our Mid-week Market Alerts should there be any.
* 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)