- Moving the markets
The bond market was the bad guy today, as higher yields scared off stock buyers for the third day in a row. The 10-year yield jumped to 4.18%, the highest since last November, and the 30-year yield was close to its October peak.
This hurt real estate stocks, which fell more than 1%, and made the market more nervous, with volatility at its highest since June. Utilities also got a beating, losing 2.3%.
The stock market was due for a correction anyway, but rising rates could make it worse, as momentum has been fading lately. Some analysts think that the old pattern of “break, bounce, break again” will still hold, as long as there is some hope that the long-term trend is up.
On the earnings front, there were more misses than hits, with Qualcomm, PayPal, and Expedia all disappointing investors and seeing their shares drop.
Later today, we will hear from two of the biggest names in tech: Apple and Amazon. The dollar was steady, Crude Oil recovered some of its losses, while gold slipped a bit under the pressure of higher rates.
These higher 10-year yields are starting to weigh on the major indexes, especially the S&P 500, as this gap can’t last forever—and from this chart it looks like that the index will have to ‘catch down’ to the yield.
And that means trouble ahead.
- “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 fell for the third day in a row and dragged down our Trend Tracking Indexes (TTIs). As usual, the Domestic one took the biggest hit, but it is still well above its line that separates the bull and bear markets.
This is how we closed 08/03/2023:
Domestic TTI: +4.99% above its M/A (prior close +5.52%)—Buy signal effective 12/1/2022.
International TTI: +6.21% above its M/A (prior close +6.69%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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