- Moving the markets
The markets tried to shake off their August blues by betting on bad news. The Labor Market showed signs of a slowdown, with fewer job openings and lower revisions. The US Macro Data index also dropped for eight days in a row.
Some analysts feared a hard landing recession, but Wall Street traders saw a silver lining: the Fed might cut interest rates sooner and more aggressively. The hopes for lower rates were boosted by falling bond yields and weak Consumer Sentiment data. The market expectations for Fed rate changes reversed course and ignored Powell’s hawkish stance.
The rally was also fueled by a short squeeze, as the bears had to cover their positions. Nvidia soared above its pre-earnings highs before losing some steam. The dollar took a dive and posted its biggest loss since mid-July. Gold shone and jumped almost 1%.
I think the market volatility in August is not over yet, and I expect more swings in September as the market adjusts to a slower economy. The Fed’s past rate hikes have taken their toll on the economy, especially on the housing market, which faces higher mortgage rates.
- “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 shrugged off the negative news and trimmed some of their August losses. Traders and algos were optimistic about the future. Our TTIs rose, and last week’s potential domestic Sell signal was postponed for now.
This is how we closed 08/29/2023:
Domestic TTI: +3.06% above its M/A (prior close +1.91%)—Buy signal effective 12/1/2022.
International TTI: +4.65% above its M/A (prior close +3.41%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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