Finding Support

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the markets

After much bobbing and weaving, the major indexes found some footing and closed in the green led by the Nasdaq with a 1% gain. Upcoming economic data points and corporate earnings later this week kept the rally in check.

All eyes were on Fed head Powell’s speech this morning and, as ZeroHedge pointed out, his view on current “unwarranted” easing of financial conditions. In the end, Powell said nothing and barely commented on monetary policy at all.

Traders took that as a bullish sign and, despite the looming CPI report on Thursday, pushed stocks higher and out of the doldrums. An assist came from a short squeeze, which finally had the desired effect after two failed attempts.  

Bond yields rose, the US Dollar went sideways, and Gold squeezed out some modest gains and maintaining last week’s advance.

I expect the sideways to slighter higher pattern to continue, until Thursday’s CPI will likely end the current tug-of-war between bulls and bears.

Continue reading…

2. “Buy” Cycle Suggestions

For the current Buy cycle, which started on 12/1/2022, I suggested you reference my most recent StatSheet for ETFs selections. However, if you came on board later, you may want to look at the most current version, which is published and posted every Thursday at 6:30 pm PST.

I also recommend for you to consider your risk tolerance when making your selections by dropping down more towards the middle of the M-Index rankings, should you tend to be more risk adverse. Likewise, a partial initial exposure to the markets, say 33% to start with, will reduce your risk in case of a sudden directional turnaround.

We are living in times of great uncertainty, with economic fundamentals steadily deteriorating, which will eventually affect earnings negatively and, by association, stock prices. I can see this current Buy signal to be short lived, say to the end of the year, and would not be surprised if it ends at some point in January.

In my advisor practice, we are therefore looking for limited exposure in value, some growth and dividend ETFs. Of course, gold has been a core holding for a long time.

With all investments, I recommend the use of a trailing sell stop in the range of 8-12% to limit your downside risk.

3. Trend Tracking Indexes (TTIs)

Our TTIs headed north, as the markets finished the session with bullish sentiment.

This is how we closed 01/10/2023:

Domestic TTI: +3.97% above its M/A (prior close +3.20%)—Buy signal effective 12/1/2022.

International TTI: +6.52% above its M/A (prior close +6.26%)—Buy signal effective

12/1/2022.

Disclosure: I am obliged to inform you that I, as well as my advisory clients, own some of the ETFs listed in the above table. Furthermore, they do not represent a specific investment recommendation for you, they merely show which ETFs from the universe I track are falling within the specified guidelines.

All linked charts above are courtesy of Bloomberg via ZeroHedge.

Contact Ulli

Leave a Reply