Special Bulletin: January 21, 2020

T.I.N.A. and F.O.M.O. are setting the pace. But are they alone?

We are not talking about some Hollywood celeb or a new line of fashionable west-coast clothing. TINA & FOMO are as Wall Street as it gets. These are acronyms, of course, and they properly elucidate our current bull market. TINA: There Is No Alternative (to equities), and FOMO: (the) Fear Of Missing Out, are in control of the stock market currently.

But as with any physical object (or cultural perception) already in motion, it needs an energy source to keep it going. And our current record setting market is no exception. We’ll give you one guess at what’s behind this launch to all-time highs.

Answer: A strong economy.

Let’s agree on something. Even in an environment where there were no alternatives to equities and investors were fearful of missing out on an advance, the market would fall if the economy was rapidly deteriorating. The point is that TINA and FOMO can’t do the heavy lifting by themselves, at least not for long. What did they use to say in Little Rock back in the 90’s?

Answer: “The economy, stupid.”

This time around it will most likely help the incumbent as the stock market continues to benefit from the strength of the underlying economy. Remember, stocks don’t have to go down just because they went up. They do, however, go down when the outlook for the economy goes down.

Our Current Market Outlook remains “Market in an Uptrend” with a “green” light. While the long-term technical condition of the stock market remains sound, our “Core 4” internal indicators are displaying 1 red and 3 green lights. That combination signals a technical condition that is on the verge of going yellow. Caution is warranted in the near-term as investor sentiment remains at very high levels. A sharp pullback in stocks designed to unnerve traders and weak-handed investors could happen at any time. 

Over the past several quarters our Current Market Outlook signals, derived from following the actions of big money through our daily, disciplined “math of the market” mathematical process, have been excellent. Our signals are based on specific internal indicators of the stock market that gauge the current movements of large amounts of capital and then compare that reading to historical data. Thus, the footprints of money. Not a subjective opinion, just objective math of the market. 

What might an investor do now? Taking partial or even full profits on holdings that have advanced 25% or more can be seen as wise. Preparing a “buy the dip” watch list of superior stocks that are extended in price is an excellent use of time. Waiting for a test of the 21 day moving average by the major indexes and leading stocks can lead to new insights. If that test holds, that’s seen as strength! If it fails, then one might expect a deeper selloff to the 50 day mav. Note: We still do NOT see technical evidence of a looming, severe correction. 

Have a Triumphant day! ®