- Moving the markets
The market rally fizzled out on Monday as the major indexes gave up their early gains and closed nearly flat or lower. The Dow was the biggest loser, while the S&P 500 and Nasdaq barely stayed above water. According to Bespoke Investment Group, the S&P 500 is now more overbought than any time since July 2021. Yikes!
It was a slow day for traders, who had little to cheer about after last week’s debt ceiling drama and the bizarre jobs report that raised more questions than answers. Some analysts wondered if the rally was too narrow and too fragile, relying on a few stocks to prop up the market.
The economic news was not encouraging either. US factory orders grew by a measly 0.4% in April, half of what was expected, and the previous month’s figure was revised down. The services sector also disappointed, showing signs of slowing down. How can anyone still claim that the economy is doing fine and there is no risk of a recession?
The bond market seemed to agree, as yields dropped sharply, and the 2-year note fell below 4.5% again. The dollar was flat, but gold shone brighter and moved closer to $2k.
Apple briefly hit a new record high after announcing its futuristic VR/AR headset “Appulus”, which costs an arm and a leg and won’t be available until 2024. But investors quickly realized that they were buying a dream and sold off the stock, dragging the rest of the market with it.
Bank stocks also suffered, especially the regional ones, as the index KRE took a dive. The big picture looked grim, as analyst Mathew Piepenburg pointed out that the S&P 500 futures market is now more bearish than ever since 2011 and almost as bad as late 2007.
We all know what happened next in 2008.
- “Buy” Cycle Suggestions
The current Buy cycle began on 12/1/2022, and I gave you some ETF tips based on my StatSheet back then. But if you joined me later, you might want to check out the latest StatSheet, which I update and post every Thursday at 6:30 pm PST.
You should also think about how much risk you can handle when picking your ETFs. If you are more cautious, you might want to go for the ones in the middle of the M-Index rankings. And if you don’t want to go all in, you can start with a 33% exposure and see how it goes.
We are in a crazy time, with the economy going downhill and some earnings taking a hit. That will eventually drag down stock prices too. So, in my advisor’s practice, we are looking for some value, growth and dividend ETFs that can weather the storm. And of course, gold is always a good friend.
Whatever you invest in, don’t forget to use a trailing sell stop of 8-12% to protect yourself from big losses.
- Trend Tracking Indexes (TTIs)
The markets were in a stalemate on Monday, as our Domestic TTI edged lower but stayed above the trend line. It’s unclear if the bulls have enough juice to keep the rally going, or if we’re stuck in a sideways shuffle with no clear direction.
This is how we closed 06/05/2023:
Domestic TTI: +0.97% above its M/A (prior close +1.32%)—Buy signal effective 12/1/2022.
International TTI: +5.58% above its M/A (prior close +5.54%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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