Market Update
Market Edge

Market Update for the Week of May 6th, 2024

Relatively speaking - April was a horrible month for the stock market! It saw the major market indexes fall below their 50-day Moving Averages (MA), which is never a good sign and which also brings concerns that they could drop, sooner or later, below their 200-MA. Fortunately, the bad news ran out of days in April and consequently May has seemed - hopeful. The Volatility Index (VIX), known as the ‘Fear Guage’ eased to its lowest level since the month of March, the reason being that investors’ fears tied to inflation subsided a bit.

Our readers have read over and over here that on Wall Street good news can be bad (for the market) and bad news can be good. This week’s events confirmed this observation. April saw 175,000 new jobs being added – HOWEVER – economists had expected 240,000 new jobs would be added. Because there were fewer jobs added than predicted seemed to bolster that case for the Federal Reserve to still lower rates this year. Consequently, the markets saw their second week of gains.

Lets look at the week………..

S&P 500 (stockcharts.com)

Friday the S&P 500 closed at 5,127. The index is down 1.61% for the past 30 days however.

Dow Jones Industrial Average (stockcharts.com)

Closing at 38,675, the Dow lost 1.15% of its value over the last month.

NASDAQ (stockcharts.com)

Friday saw the Nasdaq close at 16,156, likewise down for the past month by 0.74%.

Russell 2000 (stockcharts.com)

The above chart, which reflects well with the actual Russell 2000 chart, illustrates the Rydex Russell 2000 chart. This index closed Friday at 2.035 and lost 1.95% this past month.

2 – Year Treasury (stockcharts.com)

The 2-year Treasury yield closed at 4.82% Friday. The 5-year landed at 4.50% while the 10-year closed Friday at 4.51%.

Volatility Index (stockcharts.com)

By weeks end investors were feeling a bit more comfortable than the past few weeks. The Volatility Index closed at 13.45 down from last weeks close of XXXXXXXXXXXXXXXX

30 – Year Mortgages (stockcharts.com)

The national mortgage rate stands at 7.22% currently. Single family home prices (mortgaged through Fannie Mae and Freddie Mac) had risen 1.2% in February which was the most since Aprill 2022.

West Texas Intermediate Crude Oil (stockcharts.com)

Friday West Texas crude closed at $78.11. Look for prices this week to vary between $74.50 and $78.99/barrel.

Commentary

Due to my traveling this week, my commentary will not be lengthy.

A few things to watch: tensions between the U.S. and China have escalated into a bona-fide financial confrontation. Treasury Secretary Janet Yellen tried to persuade China to purchase $400 billion in U.S. debt however there were no takers in what may lead to a series of economic and political retaliationstowrd the CCP. Global instability may be the result. By not lowering interest rates, the U.S. has put tremendous pressure in the China’s stock market which is limiting the country’s ability to add some breathing space to a very intense atmosphere that has pervaded the Chinese economy. Added to this are the recriminations being handed to Beijing concerning Chinese aid to Russia, specifically to military hardware being sent to the Ukrainian front.

As noted above, this week’s market began a rebound, especially after Jerome Powell signaled the Fed’s position of no desire of raising rates. That had a positive effect on Wall Street where Friday saw the Dow rise by 449 points, the S&P 500 by 63, the Nasdaq by 315 and the Russell 2000 by 19 points. Although these indexes continue to remain below their respective 50-day Moving Averages, they are hovering just shy of them. We’ll see if a trend develops any time soon.

We issued a Market ‘BUY’ Alert on Thursday to be performed before the markets closed on Friday. That’s it for this week. Stay tuned……………………………

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 38,675. The S&P 500 at 5,127.

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 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 Products5/3/24
A portfolio consisting primarily of Banking stocks  5/3/24

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

More Market Watch Articles

See Past Market Edge Updates