- Moving the markets
The Dow led the way in a bullish day for the stock market, while the Nasdaq trailed behind but managed to end its 4-day losing streak.
Tesla was one of the laggards, dropping 2% amid a tech sell-off. The rally was fueled by strong earnings reports, as 80% of the S&P 500 companies that have reported so far beat Wall Street’s lowered expectations.
The market rebounded despite rising bond yields and Apple’s fifth consecutive day of losses, which shaved off 10% of its value since last week. This was its worst performance since November. Tyson Foods also had a rough day, but the market recovered some of its losses in the final hour thanks to bargain hunters.
The dollar was flat, while gold dipped and then recovered but still closed in the red.
Later this week, investors will pay attention to the consumer and producer prices indexes, which are key indicators of inflation and economic health. Both could move the market significantly depending on their outcomes.
In the meantime, traders should be aware of the seasonal pattern of the volatility index (VIX), which tends to spike in August. This chart shows how this could spell trouble for stocks, as higher volatility usually means lower prices.
Remember, when the VIX goes up, stocks go down.
- “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 reversed its downward trend and recovered some of the losses from last week. Our Trend Tracking Indexes (TTIs) also moved up slightly.
However, the market could face some headwinds in the coming months, as August and September have historically been unfavorable for investors.
This is how we closed 08/07/2023:
Domestic TTI: +5.12% above its M/A (prior close +4.24%)—Buy signal effective 12/1/2022.
International TTI: +6.80% above its M/A (prior close +6.15%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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