Market Update
Market Edge

Market Update for the Week of June 17th, 2024

We are making this week’s report free

What will the markets do when the Federal Reserve finally really does lower interest rates? The Nasdaq has, without a doubt, been the golden child of 2024 with a year-to-date return in excess of 15%. In the upcoming week we may see a burst of volatility in trading as well as a higher volume of the stocks actually trading. This is due to what’s known as ‘Triple Witching” . This happens when contracts tied to stocks and indexes expire on Friday, coinciding with the quarterly rebalancing of indexes.

Let’s look at the past week’s numbers………

S&P 500 (stockcharts.com)

Fridays close saw the S&P 500 at 5,431. For the past month it has seen a 3.52% rise

Dow Jones Industrial Average (stockcharts.com)

THE DJIA closed at 38,589 Friday. For the month the Dow is down 2.45%

NASDAQ (stockcharts.com)

The Nasdaq continues to be the golden boy of the equity markets closing at 17,688 Friday. For the past month the Nasdaq is up 7.13%

Russell 2000 (stockcharts.com)

The Russell 2000 has continued to signal caution toward the stock market. Closing at 2.006 on Friday the Russell 2000 is down 3.81% for the month. Please see Guy’s Commentary for more on this index.

2 – Year Treasury (stockcharts.com)

Treasuries have been coming down these last few weeks. Friday saw the 2-year Treasuries settle at 4.71%. The 5-year at 4.24% and the 10-year at 4.22%

Volatility Index (stockcharts.com)

As investors feel more anxious, you’ll notice that the Volatility Index will go up. A reading at 20 or more shows investors becoming concerned on the direction of the market. 30 and above shows fear and 40 and above sees investors heading out the Fire Exit. Closing Friday at 12.66 its obvious we’re nowhere near those levels.

30 – Year Mortgages (stockcharts.com)

Reacting to Government Treasury Bonds, the national rate of a 30-year fixed mortgage stands currently at 6.95%.

West Texas Intermediate Crude Oil (stockcharts.com)

A barrel of West Texas Intermediate Crude Oil closed at $78.05. This week should see prices vary between $78.50 and $82.00/barrel.

Commentary

After the Fed meeting on Wednesday the S&P 500 topped 5,400 for the first time in its history while at the same time marking the 20-month anniversary of the current Bull Market. Chairman Jerome Powell observed after the meeting ended that “The most recent inflation readings have been more favorable than earlier in the year, however, and there has been modest further progress toward our inflation objective…”

The Federal Reserve signaled that they foresee one rate reduction, however in (very) typical Wall Street fashion, the markets are ‘seeing’ two – one in November and another in December. Of course, anything is possible but regardless, if accurate, they will come in after the election.

The reaction on the markets Wednesday after this soft good news was to see the S&P 500 climb 45 points (ending at 5,421), the Nasdaq up 264 points (17,608) and the Russell 2000 up 32 points (2,057). The Dow was down slightly by 35 points (38,712).

As a Registered Investment Advisor for many years, I would gather information from the various sectors of the market in order to position my client’s money properly. When the markets were strong, the client’s money would be placed in growth stocks. When the markets showed weakness, I would transfer their money into a cash position which is a money market. I kept my eye on the data, indicators and charts and moved appropriately. Since August of 2022 I’ve done the same here. Our record speaks for itself and can be verified by browsing through the Archive section. On that note I want to outline a few points that are now, and have been, drawing my attention currently……….

As evidenced below, you can read the performance results since the beginning of May. We’ve transferred out of positions and remained in ones that are showing strength.

I AM concerned, however.

Inflation, which just 27 months ago was at 9%, has remained stuck @ 2.9% - 3.3% these past months. Every whisper about the Fed sends the markets one way or another. Despite the Federal Reserve’s attempts, the numbers aren’t moving much. We’re in a kind of holding pattern and this is not conducive to continued advances on Wall Street.

There are signs coming out of the economy that are disturbing me. First and foremost is the retreat of the Small Cap stocks. As I’ve written so many times, Small Caps are the canary in the coal mine. They signal strength, or a lack of such and they usually are an indicator of market direction. Frankly, Small Caps are not doing well. They had another down week (the previous week showed a bit of strength) this week and this is a disturbing sign of a continued advance in the stock market.

If you were to look at overall participation in the current rally, you would notice that only a few stocks are involved in it. These few stocks have been pushing the markets forward, however what you’d also discover is that market breadth (how many stocks are actually participating in the market or sector) is weak. This is NOT a good sign that the current rally is going to continue either. If you were to look further, 34.5% of the S&P 500’s market cap gain this year has come through one stock – Nvidia. Nvidia’ shares have gone through the roof by an increase of 166% since January 1st. It is up over 200% from this time last year!

Although Nvidia has propelled the market, along with Apple and Microsoft, relying on these behemoths to propel the market up will be dangerous if/when they go the other way. Put another way – the top 10 companies that are in the S&P 500 presently are more overvalued than were the to 10 companies during the Dot-Com days of the mid-1990’s! That’s scary!

Our current positions in the market are doing well as you can read below so we will remain in them until our analysis dictates a change. It is my hope that you will not fall for the ‘Buy and Hope’ theory provided by many financial advisors where ‘just hang in there’ has become their mantra. After all, why should you give away profits when, with the guidance provided here on GaneWisdom/Market Edge, you may be able to save as much profit and build on that profit instead of making up losses. This is how you make money on Wall Street.

We are still in a market uptrend – indeed we reached record highs this week in the S&P 500 and Nasdaq - however the fact that a small number of stocks in the S&P 500 are participating and moving the index higher as I just wrote, is not a positive sign for a continued rally. There are some market analysists and economists that are foreseeing a severe market downturn. Possibly soon. This is not good news for Biden’s reelection campaign but with everything going on in MAGA world right now who knows what message will stick the longest or how the markets will react in the coming four-and-a-half months, to economic news both good and not so good?

We will continue to offer top-tier analysis here on these pages so you can be assured that when, not if, the market reverses course, we’ll be here to give you the best guidance possible…………

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 38,589. The S&P 500 at 5,431.

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 had trading opportunities which we had taken advantage of. We’ve been publishing GaneWisdom/Market Edge for these past twenty-two months with a high degree of sagacity (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 24.2% 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 6/14/24)

We currently are/or were positioned in the following:EnteredExitProfit/Loss
A portfolio consisting primarily of Consumer Products  5/3/245/31/24+0.2%
A portfolio consisting primarily of Banking stocks5/3/245/31/24+0.1%
A portfolio consisting primarily of Small Cap (Russell 2000) stocks5/7/246/5/24-0.2%
A portfolio consisting primarily of Nasdaq traded stocks       5/8/24open+8.8%
A portfolio consisting primarily of Large Cap (S&P 500) stocks 5/8/24open+7.0%

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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