- Moving the markets
The market took a small but widespread dip today, as investors are facing a flood of earnings reports from 160 companies in the S&P 500. The mood was tense, but not hopeless, as most of the firms beat the low expectations that were set for them.
Some analysts think this means the economy can dodge a recession, even though they ignore the signs of inflation and uncertainty ahead.
According to FactSet, analysts still expect a 7.1% drop in earnings from a year ago, marking the third quarter in a row of shrinking profits. How does that square with the high stock prices we see today?
Bond yields jumped, despite weak economic data, and the dollar broke free from its recent range. The usual suspects – short sellers – prevented a bigger sell-off and kept the S&P 500 from losing more than 1% in 40 days.
Banks took a hit, as the 10-year yield rose above 4% again, and the 30-year reached its highest level since last November. Gold didn’t shine either and fell below $2k again.
As for inflation, those who think it’s tamed may have to think again. Crude oil is climbing up from its lows, while wholesale gasoline is ready to burst. In short, it was a rough day for the bulls, but not a disaster. Yet.
- “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 markets faced a lot of doubt and hesitation, and the main indicators dropped slightly. However, our Trend Tracking Indexes (TTIs) were unaffected and stayed firmly in positive territory.
This is how we closed 08/01/2023:
Domestic TTI: +6.53% above its M/A (prior close +6.97%)—Buy signal effective 12/1/2022.
International TTI: +8.37% above its M/A (prior close +9.01%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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