Special Bulletin: May 18, 2023 (2pm Update)

Don’t Look Now, but New Highs for 2023

The stock market is doing the unthinkable: it’s going up in the face of severe worries and persistent threats. As we have been stating in our past few posts, the market was showing remarkable resiliency in spite of serious “news” headwinds. 

To make the point, we posted this just last week… “We get it. Some would define this period as boring. And we can see their point. But given all the looming issues (rate hikes, inflation, debt-ceiling debate, banking crisis, China threats, biased legacy media, etc.) for the stock market to have moved sideways is more stunning than boring in our opinion!” And as of today, the 2 main stock indexes have hit fresh new highs for 2023.

Let’s keep it in perspective though. The main indexes are no where near their old highs from late 2021/early 2022. Further, many sub-indexes are struggling and are no where near 2023 highs (biotech, transportation, health care and small cap stocks), and others are in fact negative for the year (banks, utilities & energy). Fact is, if it wasn’t for just a handful of massive tech titans (which, by the way, may be way over owned by historic measures) the major indexes would be only slightly above breakeven for the year. But that’s how the stock market works sometimes.

With a successful intra-day test of yesterdays highs on the SP500 and an improvement in our Core Four, our Current Market Outlook has been upgraded to “Market in an Uptrend” (as of 2pm today SPX @ 4,161.78) with a green light. Our “Core Four” (see top of page) shows 2 yellow and 2 green lights with a plunging VIX. (Note: The VIX is getting noticeably low which suggests complacency is growing.)

Last week we also shared, “With all the threats looming in front of investors, it is an important time to be seriously concerned. Yet, properly hopeful that conditions will change for the better and that as investors we will have wisdom to recognize it and courage to participate in it. But remain on the alert!” And so, we thank the Lord for wisdom, and we are exercising courage by “going green.”

Remember, this signal has no guarantee, none of them ever do. Today’s green signal simply reflects the current conditions for the stock market based on the math of the market at this moment in time. Current conditions could change as soon as tomorrow. But if they do, we will too.

While on that thought, here’s an important observation: the Nasdaq has retraced 50% of its loss from the start of the bear market. The SP500 has similarly. That could mean the institutions may cease buying for a while. It’s probably safe to say that our signal would likely move back to yellow only with a close below the S&P500’s 21-day mav, and move to a red condition with a close under it’s 50-day mav. At least historically that has often been the case. But we will let our proprietary indicators dictate that when the time comes.

“There is an appointed time for everything. And there is a time for every event under heaven… He has made everything appropriate in its time. He has also set eternity in their heart, yet so that man will not find out the work which God has done from the beginning even to the end.”  Ecclesiastes 3:1 & 11 NASB 1995

Game plan: Enjoy the “surprise spring rally” but stay tuned to the debt-ceiling debate. Continue watching longer-term interest rates (see TBT) for a market tell. Go outside and enjoy God’s creation.

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

Have a Triumphant day! ®