- Moving the markets
The stock market had a decent day, except for the Nasdaq, which barely moved. It managed to squeeze out a tiny gain of +0.19% in the final minutes, but that’s hardly impressive.
This week will be packed with events that could shake up the markets, such as the Fed and ECB meetings on interest rates, the US second-quarter GDP report, the US core inflation measure, and some European inflation data. We’ll also hear from big tech companies, oil giants, and major chipmakers, as well as 165 other companies in the S&P 500.
The Fed is expected to raise interest rates by 0.25%, and many investors hope that will be the last hike for a while. The chances of another hike in September are low, but they have increased slightly from last week. So, don’t hold your breath for a rate cut anytime soon.
The economy is not looking great either. Manufacturing is slowing down, both in the US and Europe. Services are doing better in the US, but worse in Europe. This could lead to the dreaded scenario of high inflation and low growth, or “stagflation”.
But some traders are optimistic and don’t see any signs of a recession. They think the market will keep going up, even though the Economic Surprise Index shows that things are worse than expected. Hmm…
The bond market saw higher yields, the dollar was stable, and gold continued its downward slide. There was also a strange divergence between banks and tech stocks. Banks did much better than tech stocks, which is unusual.
Are traders ignoring the risks facing banks, or are they losing faith in tech stocks?
Hmm…
- “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 stock market edged higher, and our trend tracking indexes (TTIs) also rose. This week will be eventful on Wall Street, and it could cause more swings in the market and change investors’ mood for better or worse.
This is how we closed 07/24/2023:
Domestic TTI: +7.04% above its M/A (prior close +6.74%)—Buy signal effective 12/1/2022.
International TTI: +8.43% above its M/A (prior close +8.14%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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