Market Update
Market Edge

Market Update for the Week of May 20th, 2024

We are making this week’s Market Update free

Strong corporate earnings have helped the stock market these past four weeks and when the Consumer Price Index (CPI) on Wednesday illustrated that inflation pressure may be easing a bit help bolster the long-held hope that interest rate reductions this year may indeed be more than just a hope. All three indexes touched record highs on Thursday, when the Dow Jones hit, then went over, the 40,000 milestone before retreating south by the end of trading.

S&P 500 (stockcharts.com)

The S&P 500 closed at 5,303, up from last week’s close at 5,222. For the previous month the S&P 500 has gained 5.60%

Dow Jones Industrial Average (stockcharts.com)

The Dow Jones closed at 40,003 Friday - record. Up 6%+ since the beginning of 2024, the DJIA has gained more than 19% over the past year.

NASDAQ (stockcharts.com)

The tech-heavy Nasdaq closed at 16,685 at the end of trading Friday. For the past month the Nasdaq has gained 6.39%

Russell 2000 (stockcharts.com)

Continuing to use the Rydex Russell 2000 in place of the index chart (due to the continuing issues between Stock Charts and the reporting agency), the Russell 2000 has gained 7.59% over the past month, closing at 2,095. Last week’s close (5/10/24) saw the Russell 2000 at 2,059

2 – Year Treasury (stockcharts.com)

The 2-year Treasury Bond closed Friday at 4.80%. The 5-year at 4.44% and the 10-year at 4.42%

Volatility Index (stockcharts.com)

The VIX closed at 11.99, a bit below last week’s reading of 12.55. This number shows little if any investor concerns. A reading of 20 or above would be an indication of growing concern. 30 and above fear and 40 and above panic. We’re nowhere near those indicators presently.

30 – Year Mortgages (stockcharts.com)

Continuing its downward trend, the national rate on 30-year fixed mortgages stands at 7.02%, the lowest reading since April 19th.

West Texas Intermediate Crude Oil (stockcharts.com)

West Texas Intermediate Crude Oil stood at $78.74/barrel Friday. Look for a price range in the coming week between $79.00 and $81.00. Over the coming three to four weeks, we should see a drop in gas prices as the refiners are now beginning to convert to the summer blends of gasoline. Memorial Day should see the start of these reductions.

Commentary

As noted above, the Dow surpassed the 40,000 mark on Thursday. Although we include the Dow Jones Industrial Average in our weekly updates, it is becoming something of a relic. The DJIA captures only a small percentage of what goes on in the overall markets and only harbors 30 companies whereas the S&P 500 has, as the name implies, 500 companies. The S&P 500 can be viewed (should be viewed) as a much more accurate barometer than its older brother.

The Dow tends to bring in new stocks that have already hit their peak, and although the S&P 500 holds the key to the market, younger investors seem to consider the Nasdaq, with its high-tech companies, in higher regard than the Dow.

Many of our subscribers are usually on their own when managing their 401Ks. With no one to guide them, listen to their goals or give them any type of timely advice, GaneWisdom/Market Edge provides guidance that quite frankly is not available elsewhere. At least not without a hefty fee. As the Dow reached 40,000 on Friday, we had inquiries as to how that will positively affect their retirement plan. Sadly, we tell them that although great news, since the Dow only harbors 30 blue-chip stocks, it is not the best measure for their 401K strength. Hopefully our subscribers utilize our guidance, research, and comprehensive data to know when and how to move their money.

The slump in April saw the DJIA fall by 5%, however once investors began to accept the higher-for-longer Federal Reserve policy on rate reductions, along with a truly solid economic foundation as well as prosperous earnings, the current rally occurred. Another indicator we observe is market - breadth. Our readers are familiar with this term and we see strength in the NYSE Advance-Decline chart which shows new highs. This is a very strong signal that the current bull is not out of breath yet.

November 2024

Over and over, I’ve written about the conditions for the Fall elections and the importance of inflation, the economy and interest rates playing a major, if not the most important factor in electing a president. A case in point……….

In 1992, Bill Clinton was running against George Bush Sr. For those old enough to recall, the buzz words in that election year were “It’s the economy, stupid!”. Although Bush’s approval rating soared during and right after the Gulf War (September 1990 – April 1991) he still lost reelection. Why? Because of the economy. Move forward a few years and indeed the economy was roaring. The Dot-Com euphoria hit in 1996 and it caused most any investor to make money in the market. Coupled with this however, were the “Bimbo Eruptions” concerning President Clinton. Although there was considerable Congressional outrage (hypocritical though it was) as well as many Americans’ moralistic outbursts, the average U.S. citizen was quite comfortable overlooking much of this not because the economy was not doing well. It was because it was doing awesome!

It would be safe to say that every American of a certain age has become aware of Donald Trump’s picadilloes. The current Hush-Money trial continues as of this writing and the predictable denials, accusations and counter accusations also continue unabated. What the jury of Mr. Trump’s peers decides over the coming weeks may (or may not) affect his polling numbers and although early, could affect his standing at the ballot box by November. President Biden continues to fend off the ‘Sleepy Joe’ epithets thrown his way by his opponent (ironically if you’ve paid attention to the court proceedings). War rages on in the Middle East. Younger voters are unhappy about the coming Tik Tok ban. College campuses have once again become battlegrounds. Older voters are unhappy with the debt relief being floated on student loans. Add to this the Proud boys, the Oath Keepers, Hunter Biden, Stormy Daniels, Karen McDougal, MAGA, Antifa…well you get the point.

This country is at a crossroads, and it is in my humble opinion that a major factor holding things in place is centered on Wall Street. There are enough folks who want to earn a living, live in an affordable home, have a comfortable retirement, and have enough money to take a vacation now and then that have allowed many to take their eye off of ‘the troubles’ and look toward their future with some degree of peace of mind.

Although what we as a nation are now experiencing is more than a bit similar to what our mid-nineteenth century ancestors, prior to the War Between the States where today an opinion, as then can get you hurt (or castigated, shammed, or worse), it will be the economy that will play the most significant role in deciding who the next president will be. Inflation, which seems to be ever-so-slightly declining now could well be a harbinger of sorts for Biden. If the Federal Reserve reaches its (elusive) goal of 2% inflation, no recession (or a soft one at the least) and booming stock market, Biden’s reelection should be assured. If, however, things go sideways, or down drastically, a change in Administration’s (regardless of and including any baggage) will be forthcoming.

As we get closer to November, we’ll explore the ramifications for the economy as well as the stock market’s reaction to the perceived winner. Those prognostications will illustrate what bearing the election will provide.

Over the summer the direction of the economy, inflation and the course of interest rates should become apparent heading into the fall. By taking advantage of the research, strategies and analysis found within these weekly market updates, GaneWisdom/Market Edge will continue to offer opinions and suggestions in the placement and repositioning of money in your 401K, 403B, IRA, ROTH IRA, Variable Annuities and Mutual Funds. I strongly encourage you to look over our past Updates - found in our ‘Archive’ section - and I think you’ll agree we’ve provided sound financial guidance over these years.

* Perilous prediction – Pay close attention to what transpires at the Democratic Convention later in the summer. We could see an ‘August Surprise’!

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 40,003. The S&P 500 at 5,303.

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 twenty-one 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:

(As of 5/17/24)

We currently are/or were positioned in the following:     Entered
A portfolio consisting primarily of Consumer Products  5/3/24
A portfolio consisting primarily of Banking stocks5/3/24
A portfolio consisting primarily of Small Cap (Russell 2000) stocks5/7/24
A portfolio consisting primarily of Nasdaq traded stocks5/8/24
A portfolio consisting primarily of Large Cap (S&P 500) stocks5/8/24

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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