Market Update
Market Edge

Market Update for the Week of March 18th, 2024

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 38,714. The S&P 500 at 5,1i7.
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.

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

Mid-Week Market Alert for Wednesday, March 20th, 2024

Market Alert
Transfer 100% of a portfolio consisting of Biotechnology into a Cash (Money Market) before the close of business on Wednesday, March 20th, 2024

We are making this Weeks Market Update Free

Wall Street – 1897

This week saw the results of the stock market’s sensitivity to interest rates. And the beginning of some much-needed short-term profit taking.

Over the past few months, we’ve seen AI bull ahead taking the market with it. That sector was cool this week hence the market is now poised to react to interest rates a bit more readily. The other important factor, which sometimes is ignored by the ‘average’ investor, happened on Friday. Known as “Triple Witching”, this is a quarterly event when derivative contracts (financial contracts whose value is linked to the value of an underlying asset such as a stock) which are tied to index options, index futures and single-stock options expire on the same date. This event will generally lead to increased market volatility.

The University of Michigan’s Consumer Sentiment Report was released on Friday which came in lower than many economists were expecting. This report reflects the overall attitude of American consumers and as bizarre as it may seem given the improving economy U.S. consumers are showing less optimism in the economy. Should this attitude continue, this could become a major problem for President Biden’s reelection chance.

As we’ve discussed in our past Market Updates, the Chinese economic woes will affect the U.S. economy and despite a healthy glee that many Americans may feel with that knowledge, it does come with a price – lower earnings for many major American corporations, which affects their earnings, which affects the stock market, which affects investors. Possibly workers. Case in point is that Apple, Ford, HSBC and Starbucks saw glitches with their earnings because of the lessening demand of their products in China. In other news, Starbucks became the second-biggest restaurant globally behind number 1 McDonalds. Subwey, which held the number 2 spot is now standing at the bronze platform.

S&P 500 (stockcharts.com)

The S&P 500 closed at 5,117 Friday, down 0.13% for the week.

Dow Jones Industrial Average (stockcharts.com)

The Dow closed Friday at 38,714, down 0.03% for the week.

NASDAQ (stockcharts.com)

Friday saw the Nasdaq close down 0.70% for the week, ending trading Friday at 15,973.

Russell 2000 (stockcharts.com)

The Russell 2000, the index following the Small Cap markets (publicly traded companies with market capitalization of between $300 million and $2 billion) closed at 2,039 Friday, down 2.08% for the week. Although too early to forecast with complete accuracy, it may be signaling a turn in the market. As we always write, the Small Cap stocks are the canary in the coal mine given their propensity to signal overall market conditions. The chart we use to track the Russell 2000 is the Rydex Russell 2000 due to issues between the reporting agency and Stock Charts.

2 – Year Treasury (stockcharts.com)

The 2-year Treasury Bonds ended trading Friday at 4.73%, up a bit from last week’s rate of 4.47%. The 5-year Treasury ended the week at 4.33% and the 10-year Treasury at 4.31%. Much of the movement is the result of perceptions concerning the Fed’s next moves concerning interest rate reductions – or the lack thereof.

Volatility Index (stockcharts.com)

The current market conditions have not rattled investors to any great extent; however this week saw the VIX land at 14.41 on Friday. This gauge measures investors’ concern in their market sentiment. A number of 20 and above would show their concerning increasing. 30 and above would indicate fear setting in and a number of 40 and above would see investors scrambling out of the Fire Exit. Obviously, we are nowhere near that sentiment currently.

30 – Year Mortgages (stockcharts.com)

The current 30-year fixed mortgage stands at 6.74%, down from 6.88% last week and from 6.94% a few weeks ago. Expect this rate to increase, however, due to the increases in the Treasury rates over these past weeks.

The real estate market has been given a makeover due to recent changes in longstanding rules governing home-sales commissions, among other changes. Beginning in the summer most home buyers will need to sign agreements detailing how much their agent will be receiving for their services. Should the home seller be unwilling to pay for the cost of the home-buyer’s agent, the buyer could end up paying the agent directly. The average commissions of a RE agent hover between 5 – 6% (the highest in the world) which is split between the seller’s agent and the buyer’s agent. For example, a seller whose home, selling at $400,000 would pay out $24,000 in commissions at a 6%.  Now they may end up paying much less to the buyer’s agent, potentially saving thousands of dollars. The complete details are still being worked out, but the cement is certainly beginning to settle in this sector.

West Texas Intermediate Crude Oil (stockcharts.com)

Friday saw WTIC closing at $80.58 per barrel. This is the highest price WTIC has been in months and consumers are realizing this with higher prices at the pumps. We anticipate oil ices to be between $80 and $84.50 this week.

Jerome Powell – Federal Reserve Chairman

Commentary

As I scanned the market activity this week, I’m beginning to see some profit taking. As a reader you know that this was something I had been looking for. Given that the S&P 500, the Dow Jones, the Nasdaq and the Russell 2000 are at or near their all-time highs it has been overdue. It is necessary for the markets to catch their breath, and this may continue in the coming week ahead. The pullback in the Russell 2000 was a bit steeper when compared to the other three indexes but we’ll wait for the jury to come back and sit down before any conclusions will be announced.

Market Breadth is strong with most stocks advancing. This is a bullish signal.

Inflation has stalled at @ 3% (3.2%) and this is now having a negative affect on the much-anticipated reduction in rates by the Federal Reserve. The March rate- (non) reduction has now been pretty much accepted, however, we must now look toward mid-year. Although the numbers I analyze still point to a better than average chance for those reductions to happen in June, there is growing concern (even by me) that that may not happen. This week the Federal Reserve will be meeting so we should have an up-to-date forecast on Fed Chairman Jerome Powell’s thinking on the subject.

Employment remains strong with unemployment claims falling by 1,000 to 209,000 for the week ending March 8th, 2024.

The University of Michigan Consumer Sentiment report came in lower than expected, the lowest reading in three months. With inflation numbers edging higher in February due mainly to the increased cost of gasoline, rent and to a lessor extent food, the American public is still very much concerned about the economy. As I’ve stated repeatedly, I believe that this presidential election of 2024 will, as it traditionally does, come down to the economy. When there is fear, real or imagined, that people can’t make ends meet, they become anxious for a change. Certainly the present administration is not touting any of the economic successes its achieved and without a strong voice marketing this fact, people will listen to the voce which is stronger and broadcasts fear.

West Texas Intermediate Crude Oil prices continue to climb. Friday say WTIC close at $80.58 as the chart above indicated. Should oil prices continue their current upward trend look for the inflation rate to begin heading north as well.

Please refer to our Market Update below concerning the results of poor money management - or no money management. It is an eye opener to be sure.

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 38,714. The S&P 500 at 5,1i7.

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 21% + 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 currently are/or were positioned in the following:Entered
A portfolio consisting primarily of Consumer Products11/6/23
A portfolio consisting primarily of NASDAQ – dominated 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 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 Technology stocks1/22/24
A portfolio consisting primarily of electronic stocks1/23/24
A portfolio consisting primarily of Banking stocks2/2/24
A portfolio consisting primarily of Retailing stocks2/2/24
A portfolio consisting primarily of Energy stocks2/27/24

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

Now Available on Amazon

Mid-Week Market Alert for Wednesday, March 20th, 2024

Market Alert

Transfer 100% of a portfolio consisting of Biotechnology into a Cash (Money Market) before the close of business on Wednesday, March 20th, 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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