- Moving the markets
Stocks took a dive early in the session, continuing from Friday’s slump, as they needed a break after the recent unstoppable climb to the highest levels in a year driven by the AI craze.
Suddenly, investors started to worry about paying too much for their shares, while analysts struggled to find convincing reasons for the markets to keep going up. But they managed to recover some of their losses later in the session.
After all, the Fed’s hawkish stance, despite last week’s pause, and plenty of gloomy data points, will have an impact on where the markets go next. Recession or not, if any data shows signs of inflation, more rate hikes will be inevitable.
The Fed might not be happy with today’s shocking Housing Starts data, which showed the biggest monthly jump on record, as ZeroHedge pointed out. The 291k increase was the biggest percentage rise since October 2016. I’ll wait for the downward revisions before I believe it.
I guess the Fed’s pause was based on the idea of a weakening economy, so this positive “surprise” might change their mind. The unexpected strength in housing data hurt the precious metals, which fell to one-week lows. Bond yields dropped giving bond holders something to smile about.
In the end what matters is this question:
Are the markets so overpriced that a correction is now unavoidable, or is there enough juice left in the AI machine to push stocks to even more unrealistic valuations?
- “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 declined again and dragged our TTI’s down from last week’s high levels. However, they still stay in the bullish zone, so we don’t need to change anything at this point.
This is how we closed 06/20/2023:
Domestic TTI: +3.26% above its M/A (prior close +4.66%)—Buy signal effective 12/1/2022.
International TTI: +8.16% above its M/A (prior close +9.12%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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