ETF Tracker StatSheet
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GOLD GLITTERS AMID MARKET GLOOM, OUTSHINES S&P 500 IN TURBULENT TIMES
- Moving the markets
Today, the stock market experienced a sharp decline as major U.S. banks began reporting their earnings amidst a backdrop of inflation and geopolitical tensions.
JPMorgan Chase’s shares fell over 6% following its first-quarter earnings report, which suggested that net interest income might fall short of analysts’ expectations for 2024. CEO Jamie Dimon highlighted ongoing inflationary pressures as a concern for the economy.
The persistent rise in inflation, which has yet to fully manifest, is causing traders to question the Federal Reserve’s ability to counteract this trend. This skepticism has been a recurring theme in my analysis over the past few years.
The combination of escalating debt, deficits, continuous military engagements, and diminishing confidence in the government has driven investors towards gold, which has yielded a year-to-date return of +13.45%, significantly outperforming the S&P 500’s +7.48%.
Oil prices have surged on reports of potential military action in the Middle East, contributing to the inflationary worries that are already pressuring the market. Meanwhile, the Federal Reserve’s indication of fewer rate cuts has raised concerns about asset valuations.
This week’s inflation indicators, including the Consumer Price Index (CPI) and Producer Price Index (PPI), came in hotter than expected, dampening the hopes of those anticipating rate reductions. With less than two rate cuts now anticipated for 2024, the market’s reaction was evident. Federal Reserve officials have echoed a consistent message, suggesting that interest rates may remain elevated for an extended period.
As the week concluded, all major stock indexes and sectors closed in the red, with Small Caps leading the downturn. Bond yields provided some refuge, rising over the week but dipping on the final day.
The U.S. dollar saw its largest increase since September 2022, while Bitcoin retracted its weekly gains. Gold, despite a strong start, ended the day lower after an initial 3% surge.
With the volatility potentially linked to the upcoming Tax Day on April 15, investors are left wondering:
Will the market’s performance post-Tax Day follow historical patterns?
2. Current “Buy” Cycles (effective 11/21/2023)
Our Trend Tracking Indexes (TTIs) have both crossed their trend lines with enough strength to trigger new “Buy” signals. That means, Tuesday, 11/21/2023, was the official date for these signals.
If you want to follow our strategy, you should first decide how much you want to invest based on your risk tolerance (percentage of allocation). Then, you should check my Thursday StatSheet and Saturday’s “ETFs on the Cutline” report for suitable ETFs to buy.
3. Trend Tracking Indexes (TTIs)
Tensions in the Middle East and rising inflation concerns jointly pressured the major stock indexes, causing them to retreat from their high levels. Investors found few safe havens, as even gold, despite an initial 3% increase, failed to maintain its momentum and closed in the red.
Our TTIs also experienced a downturn, ending the day with significant losses. However, they remained above their trend lines, indicating that the long-term uptrend is still intact.
Additionally, our individual investments did not reach their trailing stop-loss levels, so we did not exit any positions. Despite the day’s losses, we continue to hold a positive market outlook for the foreseeable future.
This is how we closed 4/12/2024:
Domestic TTI: +6.78% above its M/A (prior close +8.72%)—Buy signal effective 11/21/2023.
International TTI: +7.14% above its M/A (prior close +8.54%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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