ETF Tracker StatSheet
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DOW CLINGS TO GAINS AS EARNINGS SEASON BEGINS
- Moving the markets
The Dow managed to squeeze out another positive close, thanks to strong bank earnings that beat the low bar set by analysts. The S&P 500 and Nasdaq started off strong, but lost steam and ended in the red. Still, both hit their highest levels since April 2022.
Analysts are bracing for a dismal earnings season, with S&P 500 profits expected to fall by about 7% year-over-year, according to FactSet. That would be the worst performance since the second quarter of 2020, when earnings plunged by 31.6%.
You might wonder how the stock market can stay so high amid such gloomy prospects. One reason is the hope that inflation is easing, based on recent economic data. Traders are betting that the economy can keep growing without overheating, despite the Fed’s hawkish signals. So far, their optimism has paid off.
The “Goldilocks” scenario is still alive: “not too hot, not too cold, but just right.” The Citi Surprise index shows that economic data has been mostly positive and above expectations. But the Fed is the ultimate judge of whether this fairy tale can last.
The short squeeze frenzy fizzled out today, while tech giant Nvidia gave up its early gains and turned negative. Bond yields bounced back today, with the 10-year approaching 4%, but falling short. The dollar has been on a losing streak, posting its second biggest weekly drop since March 2020.
The precious metals market was busy this week, with silver outshining gold and other commodities.
Next week, earnings season will ramp up, and we will see if low expectations can justify high 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 S&P 500 and the Nasdaq failed to hold on to their early gains and ended in the red, despite traders and algorithms trying hard to push them higher.
Our TTIs also pulled back, but they remain firmly in bullish territory.
This is how we closed 07/14/2023:
Domestic TTI: +5.75% above its M/A (prior close +6.87%)—Buy signal effective 12/1/2022.
International TTI: +8.00% above its M/A (prior close +9.30%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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