Over the next several trading days, we may see what the market holds in store for the coming weeks and possibly months. The S&P 500 has varied between 4,300 and 4,600 for a while. Should the S&P 500 hold at 4,450 we could expect a continued rally and look at the previous weeks gyrations as a consolidation. Either way, we should see a trend – up or down - materialize in the not-too-distant future.
Thursday saw the S&P 500 rally due to the retail sales numbers jumping (+0.6%) month-over-month in August. Economists had only forcast a +0.2% jump. Consumers continue to spend money even though higher prices are the new normal. Borrowing costs have accelerated over the past 18 months due to the Federal Reserve’s battle on inflation.
Ironically as the economy remains resilient, the demand for oil is increasing. Thursday crude oil prices jumped nearly 2% bringing the price of a barrel of oil to $90 – the highest price since last November. This price level may remain (or increase) as both Saudi Arabia and Russia have committed to cut oil production through the end of the year. US WTI (West Texas Intermediate) prices are up 12% year-to- date and up 40% since March when the price was $64 a barrel. This uptrend in oil prices comes at a critical time due to the country’s strategic petroleum reserve sitting at a 40-year low due to the White House’s use of this reserve earlier in the year in order to help lower prices to in an effort to tame inflation. Ironically (or not) this price increase puts upside pressure on inflation which in turn may cause the Federal Reserve to stay tight with interest rates. We take a more sobering view on the loud clanging about ‘No recession’ as well as ‘a soft-landing’ recession hoopla.
Friday was known as ‘Triple Witching’. Happening four times per year on the third Friday of March, June, September and December, Triple Witching is the simultaneous expiration of stock options, stock index futures and stock index contracts – all on the same day. This event usually can cause increased trading volume and unusual price action in underlying assets. Friday’s event saw prices take a nose-dive. For the week the Dow Jones closed at 34,618, up minimally at + 0.12%. The S&P 500 4,450 down - 0.16%, The NASDAQ closed at 13,708, down - 0.39% and the Russell 2000 closed Friday at 1,847 down -0.24%. Most of the market’s gains for the week were wiped out by Friday’s losses.
From September 8th until the market closed on the 15th the 11 sectors of the market were mixed. Let’s take a look:
In plain English what we’ve seen over the past 12 months with the good economic news was actually bad news for the stock market as the interest rates moved higher. Thankfully it doesn’t look like the Fed will raise interest rates at the September meeting, and there is growing optimism that they will hold rates steady through the end of the year and perhaps (just perhaps) the cycle of rate hikes may be over. We, however, believe one more rate hike will indeed happen. Despite the overly optimistic stock market Gurus pronouncements, keep in mind that we are NOT at the Federal Reserve’s stated goal of 2% inflation yet. Additionally, the inflation rose back up in August to 3.7% which was higher than July which clocked in at 3.6%.
Mortgage rates are as high as they have been in years, and this may be enough to slow the economy enough that may prompt the Fed to avoid any more than one more rate hike. The national average for 30-year fixed rates are now averaging 7.18%. Mortgage applications fell 0.8% for the week ending September 8th.
Although there is a lot of speculation over the possibility (or not) of a recession, we are still VERY concerned with the Yield Curve. The Inverted Yield Curve to be more precise. Over these past months subscribers to GaneWisdom/Market Edge have consistently read our caveats about Treasury interest rates and they are not going away. In fact, we are seeing these rates continually increase. 2-year Treasuries are now at 5.03%. 5-year Treasuries 4.46% and 10-year Treasuries currently stand at 4.33%. Some economists believe that the Fed can achieve what’s known as a ‘soft-landing’ by bringing down the inflation rate by raising rates just enough without causing a recession. If this does happen, it will only be the second or third time in history this has happened. We’ll see.
The CBOE Volatility Index (VIX) remains unchanged from last week at 13.79% which is a signal the investors are not that concerned about the downturn in the markets. Yet.
The current support level for the S&P 500 stands at 4,450. Should the S&P 500 fall below 4,340 we will form a downward trend and we’ll adjust accordingly.
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.
Our current positions:
Market Alert: Transfer 100% of your position in a portfolio consisting primarily of electronics into CASH (Money Markets) before the close of business on Monday, September 18th.
Your particular Mutual Funds and/or Variable Annuities may or may not offer all or any of some of the above. You MUST do your homework. Doing so and finding the portfolio in accordance with the above 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.
Over the next several trading days, we may see what the market holds in store for the coming weeks and possibly months. The S&P 500 has varied between 4,300 and 4,600 for a while. Should the S&P 500 hold at 4,450 we could expect a continued rally and look at the previous week’s gyrations as a consolidation. Either way, we should see a trend – up or down - materialize in the not-too-distant future……………….
………………………..In plain English what we’ve seen over the past 12 months with the good economic news was actually bad news for the stock market as the interest rates moved higher. Thankfully it doesn’t look like the Fed will raise interest rates at the September meeting, and there is growing optimism that they will hold rates steady through the end of the year and perhaps (just perhaps) the cycle of rate hikes may be over. We, however, believe one more rate hike will indeed happen. Despite the overly optimistic stock market Gurus pronouncements, keep in mind that we are NOT at the Federal Reserve’s stated goal of 2% inflation yet. Additionally, the inflation rose back up in August to 3.7% which was higher than July which clocked in at 3.6%.....................
……………………The current support level for the S&P 500 stands at 4,450. Should the S&P 500 fall below 4,340 we will form a downward trend and we’ll adjust accordingly.
On Thursday, September 21, 2023 the S&P 500 closed at 4,330. This is below the support level stated above. Therefor we are issuing the following Mid-Week Market Alert:
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.
