As our subscribers know, U.S. Treasuries have risen dramatically over the last year. As the stock market has been falling Treasuries had climbed to a 16-year high. When yields are higher many investors opt to place money there due to the safety as well as the relatively decent rate. When rates on Treasuries rise, the cost of doing business in a company goes up and eventually trickles down to households. This week saw a change in government rates, consequently, Wall Street had its best week in what seemed like ages……
Last week we observed……..
The 2-year Treasury closed Friday with a yield of 4.99%. The rate has come down the last few weeks. Last Friday (10/20/23) saw the 2-year at 5.07% and the week before (10/13/23) saw it at 5.04%. Events in the Middle will dictate the short-term rates. 5-year Treasuries are now at 4.76% and the 10-year closing at 4.83%. The higher interest rates remain, profit growth as well as economic growth will slow down further.
This week, the 2-year Treasuries dropped to a yield of 4.83%, placing at last week’s 10-year Treasury rate. 5-year rates closed the week at 4.50% (last week – 4.76%) and the 10-year Treasuries closing at 4.57% (last week – 4.83 as mentioned). Make no mistake, we are still observing an Inverted Yield Curve however stay tuned over the coming weeks should these rates continue to drop.
Last week the VIX ended at 21.27 as investors were becoming concerned that the S&P 500 and NASDAQ had broken through their correction levels. This week, the VIX rebounded based on the results of the market ending Friday at 14.91. Remember, when the VIX hits 20 and above, concern increases. 30 and above panic is beginning to ensue and 40 + sees the panic become full bloom. We are not seeing any of this presently.
It is rare to see a turnaround materialize so quickly. Last week saw the S&P 500 fall into correction territory, ending the week at 4,117 however this week the S&P 500 roared back with a gain for the week of 5.85% closing at 4,358.
The DJIA saw an increase of 5.07%this week, ending at 34,061.
The NASDAQ Composite rose 6.61% this week, an incredible turn around for the week prior where, like the S&P 500, it was languishing in Correction territory.
Rising 7.56% this past week, the Russell 2000 ended the week at 1,760. Another incredible turnaround from the week prior. We are using the Rydex Russell 2000 chart above.
As you can observe above, the national average of a 30-year mortgage dropped slightly last week to 7.76%.
As we pointed out in last week’s post…..
The price of a barrel of oil closed at $85.54 Friday. We should expect to see the price of West Texas Intermediate Crude oil fluctuate this week between $81 and $87 dollars per barrel. Thanks to the stockpile of oil in the United States gas prices have remained fairly stable this past week despite the turmoil in the Middle East. It will remain to be seen what the 30-day, 60-day and 90-day prices do.
Friday, oil closed at $80.61 slightly lower than the bottom of $81.00 that we predicted might occur.
Throughout our previous posts, we have remarked that good news can end up being bad, and that bad news can end up being good! The bad news this week on a personal level was that the number of Americans filing for unemployment benefits increased by 5,000 2hich brought the total to 217,000 for the last week of October. This number exceeded what economists expected. The market expected 210,000 filings. Currently 1,818,000 Americans filed however the market expected 1,800,000. You would be led to believe that this increase is bad news, and it is for those filing. However, Wall Street took that to mean that the Federal Reserve may be done with rate hikes. We do not believe this as a long-term scenario. The Fed did not raise rates this week and the market celebrated by pushing the major indexes up. Dramatically. Good news! Unemployment is the highest rate since January 2022. The number of unemployed Americans now exceeds 6,500,000. Again – bad news! Nuts, we know……….
Oh Lord….emotions………….
Last week (10/23 – 10/27) we saw numerous support levels broken causing the S&P 500 and NASDAQ to enter Correction Territory. This week we witnessed those support levels rise and blow past those losses. As we watched the markets climb each day this week, we, being human, wondered if our analysis was a bit ‘off’!
In bringing together multiple data, examining that data, and then comparing numbers with multiple factors, we feel that these next five trading days will clarify the market’s near-term direction. What we saw this week was, to be blunt, startling. This was a powerful rally and may have teeth. BUT, we need to see higher highs very soon in order to call this rally full-blown. Although there are some who are calling this an early ‘Santa Claus’ rally. We are not. Too many times in the past 18 months, we’ve read, saw and heard the market Gurus throwing bombastic language around about Bull Markets, No Recession, Lower Rates, Sustained earnings and how the Bear market was over.
Trading – meaning moving money or staying put in whatever investment you’re in now – should NEVER be done by emotions. It is not only a loser’s game but a sucker’s bet. When we make recommendations, they are based on our proven strategies.
Presently there are many stock traders looking for a year-end rally, that Santa Claus rally we wrote about above. The last several trading days have given them much encouragement. We’re not buying into the euphoria just yet.
Although the Feds kept interest rates steady this month, this could change in December. At this moment it’s too early to call. You can be assured that we will continue to watch for any signals and report them to you.
We issued a Mid-Week Market Alert on Thursday, for trading on Friday (11/3) and are issuing another now (see below).
At GaneWisdom/Market Edge we use data, indicators, metrics, stock charts and mathematical formulas to help us gauge future stock market trends. This is known as ‘Technical Analysis’ and this is how we base our recommendations. This past week the support levels of the S&P 500 and NASDAQ have risen above their 50-day and 200-day Moving Averages (MA) and are back above their long-term rising support lines. Will this continue? As I stated above, this week may help us determine that. Please bear in mind (and put into perspective) that the market was VERY oversold. This could be a ‘whipsaw’. Again, time will tell. If it is a legitimate rally, we will act accordingly.
Guy W. Gane, Jr.
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 34,061. The S&P 500 at 4,358. Any profit you made in the market runup of 2023 – this past week 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 had exited the market weeks ago – 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.
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’.
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 suggesting positions in a portfolio which includes Utilities and Construction Material and Products.
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.
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 11/9/23
A portfolio consisting primarily of NASDAQ – dominated stocks
A portfolio consisting primarily of Leisure stocks
A portfolio consisting primarily of S&P 500 (Large Cap) stocks
A portfolio consisting primarily of Financial stocks
A portfolio consisting primarily of Banking stocks
A portfolio consisting primarily of Retailing stocks
A portfolio consisting primarily of Telecom 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.
