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The Triumphant Core Four

NYSE Internals
Moving Averages
Professional Selling
Investor Sentiment

Special Bulletin: August 17, 2023 (10a Update)


 “Higher Rates? Head for the Gates!”

We coined that expression just last week and it is already making its presence felt as selling pressures are growing, especially on the Nasdaq, due to higher rates.

As a result, our Current Market Outlook has been downgraded to “Market in a Correction” with a red light as of 10am ET today (SPX @ 4,413.09). Our “Core Four” (see top of page) has 1 yellow and 3 red lights now with a surging VIX (presently over its 50-day mav – warning!). Distribution Days have increased and interest rates keep rising. A 4%+ yield on the 10-year US Treasury note remains a strong headwind for stocks.

But before you jettison all of your holdings, be fully aware that the stock market is oversold at this juncture and could experience a sharp “snap-back” rally at any moment. It is possible that our Current Market Outlook signal could even be upgraded back to yellow in the next few days if a positive catalyst emerged that caused a big price rebound on a significant increase in volume. A possible bounce target on the SPX could be ~4,500 – 4,530.

Having said that, a short-term snap-back bounce like that would be suspect until the main indexes lifted over their respective 50-day mav’s and held there for a few days. Otherwise, if the next upward bounce failed to hold that key support level, then the subsequent move would likely be down sharply. This sort of action normally takes several days to play out.

The ongoing rally in growth stocks and the general stock market indexes is experiencing a profit taking correction. Will it spill over into something worse? We don’t know yet. The recent rise in the US $ and interest rates has derailed the tech trade. Climbing interest rates are a growing threat (focus on the 10-year US T-note yield). With Q3 earnings season nearing an end and rates “itching to go,” risks to stocks in the short run continue to rise. But keep in mind the current technically oversold condition and the likelihood of a near-term bounce.

While the economy still faces a difficult environment due to a determined Fed, investors should begin looking to the Fed’s annual symposium in Jackson Hole, Wyoming as a possible pivot point in their war on inflation. But will they allow for a “mini market panic” first?

Trust in the Lord with all your heart and do not lean on your own understanding.
In all your ways acknowledge Him, and He will make your paths straight.
”  Proverbs 3:5-6 NASB 1995

Game plan: While the pro’s have been selling, especially the tech names, expect an oversold bounce. If one happens ASAP, analyze its internals for staying power. Begin putting your “defense on the field” (aka. exit strategy) as the key indexes 50-day mav’s have fallen. A sustained big price move in the major indexes on massive volume would be a bullish development. The 10-year US Treasury note’s yield is a big deal. “Higher rates? Head for the gates!”

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

Have a Triumphant day! ® 

The information in this article is based on data obtained from recognized services and sources and is believed to be reliable. Any opinions, projections or recommendations in this report are subject to change without notice and are not intended as individual investment advice. Not to be used as legal or tax advice. ©2023 Triumphant Portfolio Management, LLC.

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