- Moving the market
This morning, the market showed choppy behavior, as traders attempted to adopt bullish sentiment following yesterday’s pullback, which saw major indexes relinquish their record highs.
I expected the atmosphere of uncertainty to persist, driven by the ongoing earnings season and the upcoming presidential elections, both contributing to a “nervous” environment.
This week’s earnings reports have been mixed: banks have outperformed, while United Health and chipmaker ASML have fallen short of expectations.
On a positive note, Morgan Stanley exceeded estimates, and United Airlines also reported better-than-expected results.
Ultimately, the bulls prevailed, pushing the Dow to another record high despite stretched valuations. Of the 50 S&P 500 companies that have reported third-quarter earnings, 79% have surpassed expectations, maintaining a sense of optimism in the market.
Interestingly, the financial sector and Bitcoin have moved in tandem, both trending higher. Small-cap stocks outperformed, while the Nasdaq lagged, benefiting from a continued short squeeze.
Lower bond yields favored the utilities sector, with XLU, which we own, posting an impressive 2.01% gain. The 10-year yield briefly dipped below 4% but closed just above that level.
The dollar strengthened again, but this did not negatively impact gold, which rallied to a new closing record high. For now, gold and the dollar appear to have decoupled.
Bitcoin reached $68,000 today for the first time since July, while crude oil remained steady above $70.
Despite the rising foreign default risk for the USA, which has reached its highest level in a year, there seems to be little concern. However, this could become significant in the future.
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)
The markets began the session with a sluggish pace, but as the day progressed, they gained upward momentum. By the close of trading, the major indexes had all moved higher. Notably, the Dow achieved a new record high, while the Nasdaq lagged its peers.
Our TTIs also ended the day on a positive note, with the domestic version leading the charge. The international version, however, managed to close just slightly in the green.
This is how we closed 10/16/2024:
Domestic TTI: +9.64% above its M/A (prior close +8.95%)—Buy signal effective 11/21/2023.
International TTI: +7.20% above its M/A (prior close +7.05%)—Buy signal effective 11/21/2023.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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