- Moving the markets
The market opened with a thud today, as investors dumped stocks amid a slew of bad news from around the world. China reported dismal trade data, showing a sharp drop in both imports and exports.
Italy slapped its banks with a surprise tax hike, sparking fears of a new debt crisis. And Moody’s downgraded the US banking sector, citing higher funding costs, regulatory capital issues and rising risks from commercial real estate loans.
Moody’s also warned of a looming recession in the US, saying that the banking sector will face tighter credit conditions and higher loan losses. So much for the Fed’s reassurance that the financial system is “resilient”. Maybe they should check their dictionaries for the meaning of that word.
The earnings season did not help either, as UPS missed its revenue target for the second quarter, sending its shares lower. The only bright spot was a late rally that trimmed some of the losses, thanks to some short covering and bargain hunting. The major indexes ended the day in the red, but not as deep as they were in the morning.
The bond market also saw some volatility, as the 10-year yield dipped below 4% at one point, before recovering slightly. The dollar gained strength against most currencies, while oil and gold prices retreated.
The AI corollary to the Covid/crypto boom is still alive, as this chart shows.
What’s next?
- “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 market took a hit today, as Moody’s lowered its rating on the US banking sector, raising concerns about its profitability, capital, and risk exposure. The downgrade triggered a sell-off in stocks, but some buyers stepped in later to take advantage of the lower prices.
The major indexes closed in the red, reversing most of yesterday’s gains. Our TTIs followed the same pattern, losing what they had gained the day before.
This is how we closed 08/08/2023:
Domestic TTI: +4.60% above its M/A (prior close +5.12%)—Buy signal effective 12/1/2022.
International TTI: +6.03% above its M/A (prior close +6.80%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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