- Moving the markets
It was another session during which traders adopted a “wait and see” attitude, as they digested the latest earnings reports along with their potential economic consequences. The major indexes chopped around within a narrow range and ended essentially unchanged.
Even though the view that earnings have been resilient, given reduced expectations, some profit warnings apparently kept traders and algos subdued and not in the mood to press the “buy” buttons.
The theme remained that the battle continues, with more potential rate hikes on deck, while profits may top only a sharply reduced bar, which has created this current dilemma of uncertainty as to whether equities have hit a glass ceiling or have more room to run.
Bond yields were mixed, the US Dollar slipped off yesterday’s highs, but gold picked up momentum and added +0.53%.
Recessionary signs are widely spread, and the NY Fed’s model appears to concur.
2. “Buy” Cycle Suggestions
For the current Buy cycle, which started on 12/1/2022, I suggested you reference my then current StatSheet for ETF selections. However, if you came on board later, you may want to look at the most recent version, which is published and posted every Thursday at 6:30 pm PST.
I also recommend you 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.
In my advisor’s 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 changed immaterially.
This is how we closed 04/18/2023:
Domestic TTI: +2.65% above its M/A (prior close +2.64%)—Buy signal effective 12/1/2022.
International TTI: +8.86% above its M/A (prior close +8.36%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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