- Moving the markets
The markets went on a roller coaster ride today, ignoring the warnings of Fed Chair Powell and other central bankers who said they would raise interest rates to fight inflation, even if it hurts economic growth.
The European markets took the hint and fell sharply, but the US traders shrugged it off and pushed the major indexes higher. The Dow led the way, while the Nasdaq lagged. Some of the optimism came from the news that all US banks passed the Fed’s annual stress test. But I wonder how they would fare in a real crisis.
The housing market showed more signs of weakness, as pending home sales dropped more than expected in May. But the economy surprised everyone with a strong Q1 GDP growth of 2%, almost double the initial estimate. The catch is that most of it came from a sudden surge in exports, which sounds fishy to me.
The markets cheered this number, but they forgot that it makes rate hikes more likely. In fact, the odds of higher rates jumped today, along with the Economic Surprise Index and bond yields. The 10-year yield soared to 3.85%, while the 2-year reached near cycle highs. The dollar also gained strength, hitting near 4-week highs.
All this hawkishness hurt gold, which gave up its earlier gains but managed to stay above $1,900. The AI boom chart is still on track.
- “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 rose moderately today, despite the global rise in interest rates. Our TTIs also moved up, with the domestic one outperforming the international one. This has been the recent trend, but the international one is still further above its trend line.
This is how we closed 06/29/2023:
Domestic TTI: +4.46% above its M/A (prior close +3.65%)—Buy signal effective 12/1/2022.
International TTI: +7.08% above its M/A (prior close +6.93%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
Contact Ulli