ETF Tracker StatSheet
You can view the latest version here.
BEARS MAUL BULLS AS INFLATION AND RECESSION FEARS MOUNT
- Moving the markets
The bulls took a break this week as the bears came out to play. The main indexes snapped their winning streak as inflation fears, Fed tightening, and recession worries spooked the traders. The yield curve inverted again, signaling trouble ahead for the economy.
The bad news started overseas, where European PMI numbers showed a slowdown in manufacturing and services. The US PMI followed suit, dragging down the futures markets.
The sell-off was widespread, with almost all S&P 500 stocks in the red. This was a stark contrast to the recent rally, which was fueled by a handful of big tech stocks. Regional banks tried to bounce back but failed miserably. The Regional Banking ETF KRE plunged more than 8% this week, while the Nasdaq and Small Caps suffered their worst weekly loss since March.
Big tech and banks moved in tandem, both ending the week lower for the first time in seven weeks. Bond yields were mixed, the Dollar rose, while commodities mostly fell on growth concerns. Natural Gas was an exception, surging higher. Gold recovered today but still languishes at 3-month lows.
The Fed holds the key to the market’s next move. But don’t expect any easy answers from them. They face a tough dilemma:
Either raise rates to fight inflation and risk crashing the economy and markets or print more money and devalue the currency in your wallet.
What will they do?
My guess is they will choose the latter when push comes to shove. Because who doesn’t love some free money?
- “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 major indexes continued to slide this week, pushing our Domestic TTI closer to a possible breach of its trend line. We are still on the bullish side for now, but another week like this one will change that, and we will find ourselves back in bearish territory.
This is how we closed 06/23/2023:
Domestic TTI: +1.95% above its M/A (prior close +2.69%)—Buy signal effective 12/1/2022.
International TTI: +5.82% above its M/A (prior close +7.54%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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