Market Update
Market Edge

Market Update for the Week of July 8th, 2024

New York Stock Exchange

Summer 2024

Although we had 4 trading days this past week, the S&P 500 and the Nasdaq both notched new records Friday. This should be cause for celebration, however there is a distinct lack of support to back these gains up. Market breadth, which is key in any continued rally, is lacking. Seriously lacking. Since market breadth is an indicator of strength (or lack thereof as we’re observing currently) it would make sense on an emotional basis to move out of the market.

As you are aware, we do not advise based on emotion, hence since our guidance is based on many factors affecting the market we are making money for our subscribers due to our following trends (which are still positive) and not ‘feelings’. We should expect to see something drastic one way or the other soon. By that we mean that the market is going to continue the current rally or take a severe turn south. In essence, Wall Street cannot continue to move upwards without underlying fundamentals being supportive of such a move.

S&P 500 (stockcharts.com)

This week saw another high in the S&P 500, closing Friday at 5,567, up 1.9% for the week, up 4.12% for the month and up 18.4% since January. These are astounding numbers. Looking at the chart above would indicate that the S&P 500 is still very bullish. However, as we wrote above, market breadth is lacking, which is a major concern. Regardless, this week saw the S&P 500 achieve another all-time high for the thirty-fourth time this year!

Dow Jones Industrial Average (stockcharts.com)

Friday saw the Dow close at 39,375 and for the month + 1.49%.

NASDAQ (stockcharts.com)

This is a chart that warms the hearts of many an investor. The Nasdaq closed the week at 18,352 up 6.68% for the past month and the twenty-fourth all-time high for 2024!

Russell 2000 (stockcharts.com)

As you know, these many months we’ve replaced the Russell 2000 chart with the Rydex Russell 2000 chart above due to the ongoing issues between Stock Charts (which is the service we use for our charting) and the reporting agency for the Russell 2000. The Russell 2000 closed out the shortened week at 2,026, down 1.80% for the past month. In any rally, at the beginning or for it to continue, the Russell 2000 needs to be a player. The numbers above are another reason we’re getting more squeamish by the week of a continued market advance. The Russell 2000 is sending a cautionary message for this market.

We may have to wait until the Federal Reserve begins their long-hoped-for rate reduction to see a sustained positive movement in this sector.

2 – Year Treasury (stockcharts.com)

This week the 2-year Treasury Bond closed at 4.61% with the 5-year at 4.23% and the 10-year at 4.28%

Volatility Index (stockcharts.com)

Investors are signaling little concern that this rally is ending. We see that the Volatility Index is currently at 12.48 which confirms this statement. Should we see a number of 20 and above, we would notice investors getting nervous. 30 and above would show a real concern that investors are getting scared and 40 and above would cause investors to throw in the towel. The current reading shows investor calmness and confidence for the foreseeable future.

30 – Year Mortgages (stockcharts.com)

The national average of a fixed 30-year mortgage is 6.95%. This is a significant rise over the past few weeks. Home buyers in certain regions of the country may be able to secure a bit better rate than the national average.

Bank of America wrote on Monday, “The wide gap between current mortgage rates and effective mortgage rates means most homeowners are unwilling to move unless forced…..Moreover, we do not expect current mortgage rates to fall much even if the Fed cuts as we anticipate.”

Amazingly, more than half of the mortgages outstanding currently have an effective rate of 4%, according to the National Association of Realtors.

West Texas Intermediate Crude Oil (stockcharts.com)

Gas prices have stayed fairly steady for the past few months and while a lack of increase is always welcome news at the pumps, we should be seeing a lower price due to the summer blends that usually come about after Memorial Day. We are still waiting. Friday saw a barrel of West Texas Intermediate Crude Oil land at $83.16/barrel. The coming week should see the price hover between $82.50 and $85.25/barrel.

The Wall in New York City which became Wall Street

Commentary

The first half of 2024 saw the stock markets march in a way that is rarely seen in so short of time. As we noted above, the S&P 500 notched its thirty-fourth record high this past week while the Nasdaq joined in at twenty-four. One of human nature’s follies is thinking, when they become used to events happening in the short term, that it will always continue. We as humans are creatures of habit and the upward climb of the markets recently can cause even the most hardened investor to become complacent. This upward trajectory is NOT going to continue. Not in the long term. I promise.

Now is the time to carefully assess your investment goals and what these goals are meant to achieve. College tuition? Retirement? A new home? Upgrade your existing home? Purchase real estate? I could go on, but you get the point. The coming twelve months will, in my humble opinion, see changes and ‘situations’ that we as Americans haven’t experienced in our lifetimes.

Job growth, which as our subscribers have read time after time, is bad news when it comes to inflation. More people working equals more money to spend, which can (and usually does) create higher demand (aka higher prices) and higher inflation. As of this writing job growth is slowing down. On Thursday of this week, the Consumer Price Index data will be released for June. Fed Chairman Jerome Powell will be addressing the Senate Banking Committee on Tuesday and the House Financial Services Committee on Wednesday. These events will be watched closely with the intention of gleaning some insight as to interest rate cuts in the fall.

This coming week will also see the beginning of second quarter earnings being released.

The stock market tries to distance itself from politics. However, since our elected officials create policies that directly affect our money, the economy and our corner of the world, that objective rarely if ever holds. This year’s pollical arena is being especially watched due to November’s election.

It was just a few short weeks ago that the consensus from Wall Street was that Joe Biden would likely pull out a victory. A slim one, but a win, nonetheless. That conclusion is no longer valid nor being a given.

After Biden’s debate performance on June 27th the election at this point in time, is, in my opinion, Donald Trump’s to lose.

There have been political figures over the years both nationally and internationally, who have either not been taken seriously due to their rhetoric and pronouncements, or not believed because of them. This naivety became and generally comes at a cost. A cost that most people, in hindsight, would have like to never have experienced.

It’s easy for someone like me to make predictions or observations based on emotions or feelings. As you know when offering financial guidance on these pages, it is NEVER based on emotions BUT – it is what Donald Trump has said, from his own voice and recorded for all to hear that I base whatever opinions or observations I have upon this issue: Should Trump be elected, the world as we have become accustomed to will no longer be. There is a saying “Absolute power corrupts absolutely” and I think its fair to say that the office of President of the Unted States has always had the capability to corrupt its resident at any time. That it has not has been a testament to our democracy as well as the limits of our system and restraints by the occupant of the White House themselves or what has been imposed by Congress. We need to be prepared.

Make no mistake, as President, Trump put forth many great initiatives and ideas. The office of the President is not called ‘the bully pulpit’ for nothing. It’s that observation that when a powerful country (or person) sneezes, the neighbor gets a cold.

It will be shocking if Biden does not step aside soon. Although he has seemingly dug in his heels about not leaving the stage, the powers behind the throne know where things are headed if he doesn’t. Donors seem to be very concerned as do members of Congress, the Senate, the nation’s governors and the public at large.

Perhaps it is already ordained that Donald Trump will once again occupy the Oval Office come January, but now, more than ever – you as an investor - need to work with a financial advisor or as a subscriber to publications such as this, as the coming election will not only affect the country’s leadership but directly affect your investments whether it be a 401k, 403b, IRA, or investment portfolio.

I will have more to say next week after hearing Fed Chairman Powell’s comments Tuesday and Wednesday as well as the results of the Consumer Price Index later in the week.

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 39,375. The S&P 500 at 5,567.

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 22% + 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:

(As of 7/5/24)

We currently are/or were positioned in the following: Entered ExitProfit/Loss
A portfolio consisting primarily of Nasdaq traded stocks5/8/24  open+12.8%
A portfolio consisting primarily of Large Cap (S&P 500) stocks   5/8/24open+10.9%

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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