- Moving the markets
Today’s session had all the excitement that I usually experience when I watch grass grow or paint dry, as the major indexes meandered without conviction and ended up around their respective unchanged lines—again.
Despite another loaded earnings day kicking into full swing, as MarketWatch called it, traders simply found something wrong with the results. The lack of forecasts from major companies kept Wall Street mired in uncertainty, while the outlook for the Fed executing another 0.25% rate hike at the beginning of May did nothing to inspire bullish sentiment.
Considering that the S&P 500 has only moved 4 points higher this week clearly demonstrates that a new driver is needed to pull the markets out of their current ho-hum environment.
Even the most shorted stocks did nothing but roundtrip, but the KRE banking index showed signs of life by bouncing to two-week highs, but it has a long way to go to make up recent losses.
Bond yields were mixed, but the 2-year recaptured the 4% level, the US Dollar roundtripped yet gained for the session, while gold slipped but stayed above its $2k level.
I expect this choppiness to continue until a sudden possibly unforeseen event wakes up bulls and bears, and the race will be on, but in which direction?
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 repeated yesterday’s performance by barely changing, as the markets remain stuck in neutral.
This is how we closed 04/19/2023:
Domestic TTI: +2.68% above its M/A (prior close +2.65%)—Buy signal effective 12/1/2022.
International TTI: +8.69% above its M/A (prior close +8.86%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
Contact Ulli