Special Bulletin: April 18, 2023

Death and Taxes

Happy tax filing deadline day! They used to say, “There are only 2 things certain in life; death and taxes.” While the odds are pretty good that we will all die (it’s a 1 out of 1 chance unless you were Elijah or Enoch), not every American pays taxes apparently, at least income taxes. I recently saw an article on Epoch Times that stated the IRS has announced publicly that around 1.5 million people have not filed their 2019 tax returns yet and (get ready for this!) are due over a billion dollars in refunds! And it gets better. If they don’t file soon, they will forfeit the refunds permanently. How about that! Who could waste such a GIFT?

While death and taxes can be considered as certain, the current direction and future trend of the stock market can not. At least not yet.

The technical condition of the major stock indexes has improved in April. From a purely chart perspective, the Nasdaq and S&P 500 are “stacked” correctly (10-day mav > 21-day, > 50-day, > 200-day). That is bullish. The rub is that the daily cumulative volume has been lacking (weak demand) and the advance/decline lines are mediocre at best (actually sick on the Nasdaq). A significant portion of 2023’s index gains have come from just a handful of the giant stocks in tech and social media. The “generals have been leading the privates” – not good in war and usually not good when investing in stocks.

Since our C.M.O. signal upgrade to yellow on March 28th (SPX at 3,971.27), the S&P 500 has advance 4.5%. Keep in mind this happened with the backdrop of a “banking crisis,” making it all the more impressive.

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light. Our “Core Four” (see top of page) shows 2 yellow and 2 green lights- close to going green.

THIS REMAINS A CRITICAL JUNCTURE. The Fed’s tough stance towards inflation and future rate hikes is at a crossroad. The S&P 500 is successfully staying over its 50-day moving average and reflecting hope by investors that the Fed will reverse course soon. Be on guard: a violent 2 to 3 day sharp, sell-off test of the S&P’s 50-day mav could happen at any moment.

On March 28th we wrote, “This brand-new slightly upward bias that is being detected by our daily study of the “math of the market” may be reflecting something as simple as a “window dressing” push into the end of the quarter. If so, it could easily fail next week and roll over again. On the other hand, there may be something more at play. “When you least expect it, expect it” was a famous saying years ago that seems to apply today regarding a possible “turn” in the market. Perhaps the inflation figures will recede more quickly and the Fed may stand pat for a bit, and maybe even change their mind (and tone) concerning possible rate cuts later this year.” Hope springs eternal! Future price support at the main indexes 50-day mav’s would be a huge tell.

While tax season comes and goes and none of us are Elijah or Enoch, death is an ever present certainty. But there is true hope! For God so loved the world, that He gave His only begotten Son, that whoever believes in Him shall not perish, but have eternal life. Jesus said to him, “I am the way, and the truth, and the life; no one comes to the Father but through Me.” Greater love has no one than this, that one lay down his life for his friends. But God demonstrates His own love toward us, in that while we were yet sinners, Christ died for us.

John 3:16, 14:6, 15:13, Romans 5:8 NASB 1995

He paid your “death-tax” so you could live abundantly, now… and forevermore! But His offer expires when you do. Don’t waste His GIFT.

Game plan: The “surprise rally” continues- feed it, but slowly. The “follow through” day happened so now closely monitor the S&P 500’s 50-day mav’s as a sign of institutional support. If interest rates (see TBT) break their long downtrend line, then prepare for sharp weakness in stocks again. Oh, and, thank you Jesus!

Note: You can learn more about The Triumphant Core Four risk management system by clicking here.

Have a Triumphant day! ®