Our Current Market Outlook was upgraded to “Market in an Uptrend” with a green light at 10:30am today (SPX at 4,344.29). Our “Core Four” (see top of page) has 2 yellow and 2 green lights. The Fed’s pause in interest rate hikes earlier this month has fueled the recent rally in growth stocks and the general stock market indexes. While the uptrend had gotten ahead of itself, it has now experienced a 6-day pullback and a near miss of the major indexes 21-day mav’s (short-term support). Market action into the end of the 2nd quarter and leading into the Independence Day holiday historically has a positive bias. Putting that all together our signal has technically improved to green.
Two weeks ago we posted, “The stock market has enjoyed a smart rally over the past 2 weeks and as such has gotten ahead of itself, or what technicians say is now “extended” which means it is ripe for a sharp pullback – a profit taking phase.” Since that day, the market has fallen in 5 of the following 7 trading days. It’s important to note that that slide has enabled the stock market to pause and refresh, which may have set it up for a good start to the second half of the year.
But, don’t lose sight of the fact that the recent gentle pullback could give way in the near future to a more harsh retest of the 50-day mav’s (in what we call a “Down, Up, Down” pattern), and that the recent move up in the so called “magnificent 7” stocks may just be quarter-end window dressing by managers on Wall Street to boost assets. If so, the technical damage that might arise in any sharper decline would be assessed immediately as to whether it was a normal “shakeout” pullback (which finds support at key technical levels), or if it might be the start of something more grim, perhaps in reaction to a souring economy or even a “scary” geo-political event.
Having said that, we expect to see the stock market bounce, or gently float, back up near recent highs into the long holiday weekend. Historical trends show a bias to the upside during this time of year. More importantly though, the market’s technical internals (as measured by our risk management discipline called our “Core Four”) continue to reveal steady institutional demand for equities in this burgeoning uptrend.
Finally, take a moment to thank God for our wonderful freedoms & abundant blessings.
“Then the Lord appeared to Solomon at night and said to him, “I have heard your prayer and have chosen this place for Myself as a house of sacrifice. If I shut up the heavens so that there is no rain, or if I command the locust to devour the land, or if I send pestilence among My people, and My people who are called by My name humble themselves and pray and seek My face and turn from their wicked ways, then I will hear from heaven, will forgive their sin and will heal their land. Now My eyes will be open and My ears attentive to the prayer offered in this place… But if you turn away and forsake My statutes and My commandments which I have set before you, and go and serve other gods and worship them, then I will uproot you from My land which I have given you, and this house which I have consecrated for My name I will cast out of My sight and I will make it a proverb and a byword among all peoples.” 2 Chronicles 7:12-16, 19-20 NASB 1995
“God, please forgive me, please forgive those that are reading this, please forgive the peoples of our nation for forsaking you and playing the part of a harlot in spite of Your abundant love for us demonstrated by Jesus on the cross at Calvary.”
Game plan: Monitor the major stock indexes to see if they hold their 21-day mav’s on any additional pullback. Begin to prepare an exit strategy in the event of a reoccurrence of Distribution Days in the near future. Refresh your watch lists and summon your courage.
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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