Market Update
Market Edge

Market Update for the Week of March 25th, 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. 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.

We are making this Weeks Market Update free

Wall Street at the end of the Civil War – 1865

For months the Gurus on Wall Street set investors up to believe that rate cuts by the Federal Reserve would take place in March. Now that the Fed has ended their March conference this week without lowering interest rates, we can finally put any lingering expectations of those reductions to rest. They did however, signal the probability that three reductions were possible this year – provided that the inflation numbers continue to show that their march to 2% is on track. Added to that is the (surprising) speculation that a recession – which is typical any time the government increases interest rates – just may not occur. This due to the strong employment numbers and an undeniable improvement in the economy.

Artificial intelligence continues to hold its effect on the stock market as was once again evidenced this week. The semiconductor sector index finished the week with a sharp increase as well. Lets look at the week’s numbers………….

S&P 500 (stockcharts.com)

The S&P 500 closed Friday at 5,234, up 2.29% for the week. The S&P 500 has experienced its 20th all-time high this year!

Dow Jones Industrial Average (stockcharts.com)

Closing trading Friday at 39,475, the Dow was up 1.97% for the week. This week saw the DJIA reach its sixteenth record high year-to-date.

NASDAQ (stockcharts.com)

Friday the Nasdaq closed at 16,428, up 2.85% for the week. Since January 1st the Nasdaq has achieved four all-time highs.

Russell 2000 (stockcharts.com)

Using the chart for the Rydex Russell 2000 illustrates the uptrend for the Small Cap markets this week. The Russell 2000 closed at 2,072 Friday, up 1.60% by week’s end. Although this index has a way to go to reach its all time high of 2,442 (11/8/21) it continues to act as a bell weather for the market as a whole.

2 – Year Treasury (stockcharts.com)

After last week’s increases in Treasury yields, this week saw the 2-year Treasury close at 4.59%. The 5-year yield 4.19% and the 10-year Treasury Bond closed at 4.20%.

Volatility Index (stockcharts.com)

Investor concerns were lowered this week due to the rise in the market as illustrated by the Volatility Index chart above. Last week saw the VIX close at 14.41 and this week saw that number fall to 13.06. Due to the remarks from Fed Chairman Powell, investors are feeling a higher degree of comfort hence the low VIX number. Any number below 20 shows little investor concern about a down market. 20 and above shows increasing concern. 30 + more worrisome investors and 40 and above see a panic toward the door.

30 – Year Mortgages (stockcharts.com)

The national 30-year Mortgage increased to 6.87%. This, as you’ll recall our warning from last week’s Market Update, was in response to the strong increase in Treasury yields of the past few weeks. The 30-year Mortgage should drop a bit over the next 14 days relative to the decrease in Treasury yields this week.

West Texas Intermediate Crude Oil (stockcharts.com)

A barrel of West Texas Intermediate Crude Oil landed at $80.63 on Friday, up 5 cents since the previous week. The unrest in the Middle East as well as the continuing situation in Ukraine is now having it’s long-expected affect on the price of oil in the U.S. Look for WTIC to spike up considerably beginning in mid-April, reaching $85 - $86 per barrel.

Commentary

As I reviewed this week’s market activity the inevitable ‘soothsayers’ are beginning to crank up again. For most of the second half of 2023 all investors heard was how interest rates were coming down in the first half of 2024. Eventually these folks decided that the month of March would be the best month and off they went with the news. Sadly, many investors bought that line. And why shouldn’t they? After all these people are professionals and (should) know more than the ‘average’ investor who contributes to their 401k week in and week out. When, in February, it finally began to dawn on the investment world that these reductions were not to be, the markets took a hit. But happily, the economy has been strong enough to absorb bad news (or disappointing news – take your pick) and the major indexes have performed nicely.

As you read above, the S&P 500 closed Friday at 5,234 and set another record this week. Before we go forward, you will recall that for weeks I have been anxiously awaiting a good dose of profit taking. We saw a bit of a pullback 3/1/24 – 3/15/24 but not enough of what would be considered average profit taking. Let me explain.

On October 30th, 2023, the S&P 500 closed at 4,166. Friday’s close as we know was at 5,234. The rule of thumb of profit taking is to withdraw most of your profits when the stock, index, or commodity has appreciated 20 – 25%. The S&P 500 is at that mark now + 25% since October 30th. The biggest advantage we offer at GaneWisdom/Market Edge is giving timely advice and guidance as to when to transfer your profits when the market signals that a downturn is about to happen or is in process. Why, after all, should you give away any of your profits when you can place them in safety in a cash position (money market) and when the market turns around at the start of another uptrend transfer back into the market thereby not having to make up a loss? Again, the S&P 500 has risen 1,068 points in less than five months. An extraordinary accomplishment by any measure. A strong bout of profit taking is overdue. Please take note and be prepared to take action when the time comes.

What has me concerned however, is that many Wall Street strategists are projecting the market to stall, if not possibly tank, by year end. Could this transpire? Of course (another reason to follow our guidance) but at this point it is too early to project. I’ve seen estimates from some of these sages where the S&P 500 falls as low as 4,200 – 4,500. That folks, is steep. I implore you to take these forecasts with a grain of salt as you will be hearing them when the market finally takes its unavoidable downturn.

Oil

Oil, as well as food prices, has contributed to the reason the inflation rate remains stuck at @ 3%. The price of West Texas Intermediate Crude Oil has risen 11.74% since January 1st. Certainly not good news for any incumbent hoping to remain in office. The bright spot however is the possible ceasefire in Gaza. The U.S. has been sending strong messages to Israel to stand down in its assault in Gaza. Although justified in my opinion, Israel is unfortunately being branded as ‘overly aggressive’ (not withstanding if such an attack on the United States were to happen by a foreign aggressor) and the White House is urging a pullback. Regardless, famine has overtaken the population in Gaza, and something surely needs to be done for them. The possibility of easing regional unrest, which has influenced oil market perceptions and supply routes, could see a reduction in oil prices. Here at home, the demand for gasoline has seen a decrease based on recent data as well. The U.S. dollar has been strengthening which moves inversely to oil prices. The reason being that a strong dollar usually makes oil more expensive for holders of other types of currencies which in turn lowers demand. The Russian aggression in Ukraine is certainly influencing oil prices and until a meaningful solution is found in that part of the world we should expect to see a bit of continued price fluctuation.

Although the markets will be closed Friday, the February Personal Consumption Expenditures (PCE) price index will be released. This report is the Federal Reserve’s preferred measure of core inflation. The expectation is that this report will show moderating price increases over January’s report.

Finally, as I’ve pointed out, most investors (with prodding from many brokerage houses) expected the Fed to cut rates 1.5% during 2024 with those cuts beginning in March. Additionally, they were being told that there would be 6 reductions during the year - despite the Fed signaling three cuts for a total of ¾% this past December. Now that the Federal Reserve has revised their expectations for unemployment downwards as well as holding their stated interest rate forecast steady, we have been given an ‘all clear’ going forward. The Federal Open Market Committee’s meeting this week verified this, which is why the markets reached all-time levels this week.

Look for some profit taking over the coming few weeks, perhaps not as much as should be done but more about letting some steam out of the valves before too much pressure builds up.

Wishing you and your family a Happy Easter!

Have a blessed and prosperous week………

Guy W. Gane, Jr.

This week the Stock Market will be closed in observance of Good Friday

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 39,475 The S&P 500 at 5,234.

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:EnteredExitProfit/Loss
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 stocks11/16/233/20/24+16.55%
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

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