The uptrend continues. Since our C.M.O went green 2 weeks ago, the major indexes have pushed to new highs for the year and to index levels not seen since the summer of ’22.
Our Current Market Outlook remains “Market in an Uptrend” with a green light (SPX at 4,313.97). Our “Core Four” (see top of page) has 2 yellow and 2 green lights with a VIX that has imploded to levels not seen since right before the Covid panic. Optimism (or is it complacency?) has expanded.
The Fed’s possible pause in interest rate hikes next week has caused institutional investors to look hopefully to the future which has given a boost to growth stocks and the general stock market indexes. The uptrend has been further aided by the “kicking the can down the road” (until after the ’24 election) so-called debt-ceiling resolution. The economy still faces a difficult environment due to higher interest rates and growing recession fears.
The S&P500 has reached an important gut-check level: 4,300. To be fair, the level extends to 4,325. (In technical analysis, it’s good to remember that lines drawn on a chart should be “fuzzy,” and not a specific price point but rather a reasonable range around the point or price level.)
So what does 4,300 mean? It is a price barrier (a resistance level) that caused the market to turn away and drop hard on August 16th, 2022. It is suspected that there may be “supply” of institutional stock up there and that it may take a while to “chew” through that supply before heading much higher. Expect a sharp 2-3 day pullback to the key indexes 21-day mav’s in the near future. However, if that level is blown through easily on high volume buying, then look for more blue skies. Until further notice (next weeks Fed rate decision?) expect a pause.
We stated this in our last post, and it bears repeating, “The market appears to be seeing something on the 6-9 month forward horizon that it likes. Investors are certainly not out of the woods, but conditions are improving. Think longer-term as you begin to deploy capital. If the bear market is dead and interest rates are at or near their rate cycle peaks, a great deal of opportunity to prudently make money will present itself in the next 2-4 years.“
“He who walks with wise men will be wise,
But the companion of fools will suffer harm.” Proverbs 13:20 NASB 1995
Game plan: Sit on your hands before making big decisions: wait to see what the Fed says next week. The major stock indexes need to hold their respective 21-day mav’s on any upcoming sharp pullbacks. Keep in mind that the end of the 2nd quarter is fast approaching- window dressing on Wall Street? Nah!
Ps. Happy birthday #6 Big H!
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.
Where Are Woodward and Bernstein When We Need Them? This article was written by Newt