Market Update
Market Edge

Market Update for the Week of November 13th, 2023

Our current position:
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.

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

Mid-Week Market Alert for Thursday, November 14th, 2023

If you have the following available in your retirement plan or current portfolio of funds, money should be transferred into them by the close of business on 11/14/23

Mid-Week Market Alert for Thursday, November 16th, 2023

If you have the following available in your retirement plan or current portfolio of funds, money should be transferred into them by the close of business on 11/16/23

As we wrote last week, the amazing whipsaw we saw the week prior (10/30 – 11/3) needed to have a follow through in order to confirm that a Bullish pattern had emerged. That happened this week. Additionally, this time period, November and December, usually sees an ‘up-market’, Stay tuned….

On Thursday (11/9/23) the IRS announced the tax brackets for 2024. Below are the numbers, however please note these figures are AFTER deductions.

S&P 500 (stockcharts.com)

Closing at 4,415, the S&P 500 saw an increase this week of 1.31%

The Dow Jones Industrial Average (stockcharts.com)

Friday’s DJIA closed at 34,283, up slightly for the week at +0.65%

NASDAQ (stockcharts.com)

The NASDAQ closed the week up 2.37%, standing at 13,798

Rydex Russell 2000 (stockcharts.com)

The Russell 2000 closed trading on Friday at 1,705, down 3.15% for the week. We use the Rydex Russell 2000 chart which is similar to the Russell 2000 chart. Due to the ongoing dispute between the Russell 2000 reporting agency and Stockcharts the chart for the Russell 2000 is not available.

Cboe Volatility Index (stockcharts.com)

Due to the recent strong rallies the Volatility Index (VIX) dropped to 14.17. Just a few weeks ago we were staring at a number of over 20. When the VIX hits 30 there is real concern but a number of 40 and above means a full-blown exit for the nearest door. We are not near that scenario thankfully. The number 14.17 is signaling that investors are feeling confident in a continued rise on Wall Street.

2-Year Treasury Bond (stockcharts.com)

As you can see above, the 2-year Treasuries ended the week at 5.04%. 5-year Treasuries are currently paying 4.68% and the 10-year Treasuries at 4.65%. In addition to the continuance of the Inverted Yield Curve which usually signals a looking recession, Moody’s Investors Service lowered its ratings outlook on the U.S. Government to negative from its previous rating of stable. This is a bellwether pointing to a continued risk of the fiscal strength of the country. They lowered the rating to Aaa (AAA is excellent). Moody’s observed that “In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the U.S. fiscal deficits will remain very large, significantly weakening debt affordability.”

The United States is now over $33 trillion in debt as of the end of September and the deficit for the period between October 2022 and October 2023 is in excess of $1.7 trillion.

Household debt has risen by $228 billion from just the last quarter according to the New York Federal Reserve. Even worse credit cards balances have risen to $1.08 trillion. Things are not bright when many Americans are using debt to cover debt. Or as the old saying goes “Robing Peter to pay Paul.

30-Year Mortgage (stockcharts.com)

As the chart above illustrates, the national average of a 30-year mortgage has declined over the last few weeks. The current rate stands at 7.60%, which is the lowest in five weeks. Mortgage applications rose by 2.5% last week, reversing the declines of the past three weeks. Treasury yields have somewhat subsided these past few weeks which most economists have credited with the lower mortgage rates.

West Texas Intermediate Crude (stockcharts.com)

West Texas Intermediate Crude Oil closed Friday at $77.17 per barrel. As we’ve pointed out in our previous posts, the extremely large supply of oil in the United States currently has allowed the price of gas to remain not only stable but also has enabled a slight reduction in price at the pumps. Despite the turmoil in the Middle East, we see the price remain relatively stable in the U. S. over the coming week.

Perhaps you’ve heard or read the phrase “Light, sweet” when referring to oil? These words are used to describe oil due to the relatively low density of the oil as well as the low sulfur content it possess. WTI is considered a ‘light’ crude oil and is also a ‘sweet’ crude oil compared to the Brent Crude Oil which is found in the North Sea. WTI, being a lighter blend, is refined mostly in the Midwest and Gulf Coast regions here in the United States and is suitable for refining gasoline as well as other high-demand products. This is our reason for including the price of WTI in our weekly Market Updates.

Commentary

The dictionary defines emotions as: an affective state of consciousness in which joy, sorrow, fear, hate, or the like, is experienced, as distinguished from cognitive and volitional states of consciousness…..Any of the feelings of joy, sorrow, fear, hate, love, etc…………………

Sounds a bit like investment decision-making, doesn’t it?

Investors would be forgiven if in the present condition of the nation and the world they base their investments based on ‘feelings’. There have always been plenty of events - world, national, business, family and personal - which would cause anyone to question a methodical approach to managing their money. However, making decisions based solely on emotions generally doesn’t work out too well. Think of the time when you made a comment in anger, or made a decision based on how you felt at that moment - and then totally regretted it! Emotions are a very human trait and each of us posses it. The quandary is how to rein in those feelings with a sound strategy. In our case a sound financial strategy.

Let’s face it, next to our health, money is the most important concern of many, if not most, people. Becoming emotionally caught up with how we earn it, save it, spend it, invest it and use it becomes a day-to-day consideration.

In many cases people will find comfort in the decisions of the masses, “They are all doing it so they must know something I don’t” becomes a mantra, if not a comforting thought. Add to that personal experiences gleaned over a lifetime with all the psychological baggage attached and it is more than easy to understand why investment decisions are made with emotions.

Most investors have a limited capacity for understanding the complexities of the information that constantly bombards them. The media has allowed us to become more-informed investors but in too many cases causes us to become baffled by an overload of information. In too many instances an investor just gives in to frustration and follows the crowd, and hoping that unlike the Lemmings, there is not a cliff nearby.

I think it is safe to say that we are headed into uncharted waters concerning world events. The vast majority of Americans are too young to understand what a true world calamity can cause to their lives. We heard from parents and grandparents’ what life was like during the Second World War but looking back through the lens of someone else’s experiences is not the same as living through those experiences. This is not to say that something catastrophic is about to overtake the world……but can any reasonable person say with total confidence that that possibility is impossible?

Although the markets have posted two weeks of positive results, we are disturbed by the fact that the Small Cap markets did not follow through this past week (see above). Our readers are aware of our reasoning and scrutiny of the consequences of this particular market and the effect it has on the broader stock market. The Death Cross appearance in the charts of the Russell 2000 (which tracks the Small Cap market) still causes us angst despite the tremendous run-up of Small Caps a few weeks ago. Additionally of concern is the continued existence of the Inverted Yield Curve of U.S. Treasury Bonds. The coming weeks should signal the short-term trend of these markets and quite likely the broader stock market.

When we analyze the data that is put forth – corporate, geo-political, governmental, as well as economic productivity – it is done without bias. In other words, we look at the numbers and not the emotions, base our analysis on that information and report the results. Are we always correct? NO! However, our method of managing money is to take a small loss to avoid a large loss. It is much easier to make up a 2% or 3% loss than it is a 20% or 30% loss after all. In a perfect world it would be wonderful to never have to absorb a loss at all, but – we don’t live in a perfect world!

This week we will begin the holiday shopping season in earnest. On Tuesday the Consumer Price Index (CPI) will be reported for the month of October. The CPI will offer a key inflation reading. The Federal Reserve will be watching closely and despite the current euphoria proclaiming the Fed is done raising interest rates, several Federal Reserve officials last week tried to keep the door open for future rate hikes. The downgrading of U.S. government debt by Moody’s that we wrote about above also should not be discounted.

Now, more than ever, it would be wise to consider where your investments are placed and if the guidance you receive (if any) aligns with your investment goals. For far too many investors – especially those who participate in company-sponsored retirement plans like 401Ks and 403Bs – guidance may not be constantly available. If at all.

At GaneWisdom/Market Edge we offer sound analysis based on many years of investment advisement. We invite (and encourage) you to review our past postings. We are confident that you will find those postings enlightening as well as perhaps indictive of the service we provide. Our weekly Market Updates and Mid-Week Market Alerts are for you, the forgotten investor, and the neglected employee. We make available what many investors never receive – clear, concise and understandable guidance to minimize losses and maximize gains……..

Guy W. Gane, Jr.

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 34,283. The S&P 500 at 4,415. Any profit you made in the market runup of 2023 – the past few weeks notwithstanding - has either been negligible or possibly disappeared. So much for the ‘Buy and Hold’ theory. Our subscribers have averaged 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. The current market is offering a few trading opportunities, and we are listing them below.

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. 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.


This week we are positioned in the following:

Entered

A portfolio consisting primarily of Utilities

11/3/23
A portfolio consisting primarily of Construction Material and Products
11/3/23
A portfolio consisting primarily of Consumer Products
11/6/23
A portfolio consisting primarily of NASDAQ – dominated stocks
11/9/23
A portfolio consisting primarily of Leisure stocks
11/9/23
A portfolio consisting primarily of S&P 500 (Large Cap) stocks
11/9/23
A portfolio consisting primarily of Financial stocks
11/9/23
A portfolio consisting primarily of Banking stocks
11/9/23
A portfolio consisting primarily of Retailing stocks
11/9/23
A portfolio consisting primarily of Telecom stocks
11/9/23

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.

* 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.


Mid-Week Market Alert for Thursday, November 14th, 2023

If you have the following available in your retirement plan or current portfolio of funds, money should be transferred into them by the close of business on 11/14/23

A portfolio consisting primarily of Small Cap (Russell 2000)– dominated stocks

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.


Mid-Week Market Alert for Thursday, November 16th, 2023

If you have the following available in your retirement plan or current portfolio of funds, money should be transferred into them by the close of business on 11/16/23


A portfolio consisting primarily of Biotechnology– dominated stocks
A portfolio consisting primarily of Health Care – dominated stocks
A portfolio consisting primarily of Transportation – dominated stocks

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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