Over and over our subscribers read in our Weekly Updates that emotions have no place when making sound investment decisions. At GaneWisdom/Market Edge we analyze a plethora of data ranging from Price/Earnings Ratios to Charting. From Geo-Political events to Market Volume. When we organize a strategy, it is done with a methodical process of research and discipline. When losses appear, emotions can dictate a thought of ‘just hang in there’ aka ‘Buy and Hold” (for dear life!) until things become so painful that instead of taking a small loss, waiting until that loss becomes a (very) large loss and then exiting. We take a different approach – taking small losses to avoid big ones. By reading our past Market Updates and Mid-Week Market Alerts you are able to confirm the above game plan and approaches. Trading by emotions can offer a quick-relief to the pain but it seldom accomplishes the ultimate objective – making, and keeping profits.
On Thursday we issued a Mid-Week Market Alert. This week we must issue another strategy for Monday (see below). Lets go on………….
We see in the chart for the Standard and Poor’s 500 above. You will notice that the S&P 500 closed just below whats known as it’s 50-day Moving Average support level. This is a bearish signal and in our business is known as a ‘whipsaw’, meaning it shows a degree of strength one day and ‘whipsaws’ the next. This is what has happened. This week the S&P 500 closed at 4,224, down 2.39% for the week.
As the above chart illustrates, the DJIA has now fallen below it’s 50-day Moving Average as well as it’s 200-day MA. Very Bearish sign. The Dow closed the week at 33,127, down 1.61% for the week.
Ending the week at 12,983, the NASDAQ was down 3.16%
The Small Cap market continued its downward trend again this week, down 1.48% for the week closing at 1,719 on Friday. However – the last 30 days have seen the Small Cap market fall by 7.87%. These stocks are popular choices by investors and is a good indicator for what is (may) about to happen in the overall market. It is what is reflected in this chart above that has us very concerned. Notice the blue line on the chart? This is the 50-day moving average (see last week’s posts on Moving Day Averages). The red line is the 200-day moving average. When the 50-day MA crosses below the 200-day MA, what’s known in the industry as a ‘Death Cross’ forms. The chart above shows that this has now happened. This is a (very) Bearish signal. In other words, the Small Cap market is announcing what could be a dire prediction for the markets.
The ’Death Cross’ mentioned last week can be seen very clearly now in the chart above. The Russell 2000 closed at 1,680 Friday, down 2.26% for the week. Please re-read last weeks update above. Enough said – only more-so.
The Volatility Index (stockcharts.com)
As you have read over these past weeks, the VIX has continued climbing. It wasn’t long ago that we saw the VIX at 13-14. Friday closed at 21.71. Selling is increasing as can be discerned from the major indexes. This chart confirms that the investing public is now becoming ‘concerned’. Do not mistake this number as a panic – we are a long way from that, however there is a degree of anxiousness going on in the markets. Stay tuned.
Mortgage rates continue their upward trajectory, which are now the highest since the year 2000. Home sales are at the lowest levels since 2008 when the subprime mortgage crises upended the real estate market. As you can see on the chart above, the national average 30-year Mortgage now stands at 7.63%. However, that rate hit 8% on Wednesday before retreating slightly by week’s end. According to the Mortgage Bankers Association, applications fell close to 7% last week from the week before.
As you can see from the chart above, the 2-year Treasuries now stand at 5.07%. 5-year Treasuries at 4.86% and 10-year Treasuries at 4.91%, each of them rising since last week. Watch for the comments this week by Fed Chairman Powell and ongoing developments in the Middle East for an indication of where these rates will land. As you read over and over these many months – there is a strong signal of a coming recession if we were to base those prognoses on Treasury rates as the Inverted Yield Curve continues to illustrate.
This week saw the price of oil spike upward to $87.69 (chart above) up from last week’s price of $82.79 for an increase of 5.7%.......
As tensions continue to rise in the Middle East expect to see oil prices to move upwards. Investors are worried over the possibility that big Middle Eastern exporters – which include Saudi Arabia and Iran – will be drawn into the conflict if tensions continue to escalate. There is strong fear that the Western Allies will impose sanctions which will slash crude supplies globally. Friday West Texas Intermediate closed at $88.08 per barrel. Last week the same barrel cost $87.69. However, as stated above, two weeks ago the price of that same barrel was $82.79. Fortunately there is an abundance of oil reserves in the US currently so we expect gas prices to remain stable, and possibly drop a bit by year end.
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 33,127. The S&P 500 at 4,224. Any profit you made in the market runup of 2023 has either been negligible or has likely disappeared. So much for the ‘Buy and Hold’ theory. Our subscribers have averaged positive returns by following our weekly updates and we will continue to offer up to the minute market analysis which can assist with your investment decisions.
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.
Bearish
Money should be in or transferred into Cash (Money Market).
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.
