Special Bulletin: March 1, 2024

 Time for March Madness in the Market?

It’s that time of year again already! The Superbowl is over, spring training is underway, and the “brackets” are coming together. Who’s your favorite? Are they hot right now, or just a perennial powerhouse that shows up when it’s prime time? Or are you the agnostic, analytical type that looks at all the stats and enters “the pool” with fresh eyes and no bias each year?

Stocks, even certain sectors, can be viewed in a similar way. Each year there are new trends, recent innovations, that create new leaders for a time. Then there’s the tried-and-true blue chippers and mega-mega-cap tech titans. Or maybe dividends are your thing.

Whatever may be your view, let’s take a look with “fresh eyes” and see what we may find regarding the “brackets” in recent stock market action. (Note: The following are only a few examples, not an exhaustive list, and are not meant as recommendations but just as an playful review of recent leading sectors.)

One of the top seeds naturally must go to the home building stocks with Jay Powell starting for them in the center position with hints of slam-dunking rate cuts coming.

Then there’s the cyber security group. After laying low and missing “the dance” for the past two seasons, they have jumped up off the bench and charged ahead on news of genuine Chinese interest in our upcoming elections.

The computer- hardware peripheral group, while small in historical stature, features a few stout veterans and by playing well lately has won the hearts (and wallets) of “fans” on Wall Street by turning over a new leaf.

Rounding out the top 4 seeds is none other than the Apparel- athletic shoemakers fresh off a strong Christmas showing and sprinting into the spring demand. They are positioned well where the rubber meets the… court.

Now as fun as that intro may have been, the truth is that even the tops teams (and stocks) can unexpectedly falter at any moment and be swept into a losing streak. And new upstart Cinderella teams (unicorn stocks?) can disrupt a bracket (industry) and cause much heartache (red ink) to the “old guard.”

To offset that potential weakness, great teams do a lot of research and recruit well. Great companies, too, do vast amounts of R&D and try hard to hire and retain the best talent. But nothing can defy gravity forever and even “magnificent” dynasties (monopolies) come to an end.

So again, I ask, “Who is your favorite?” The best teams play with heart, but consistently use their heads. For the fanatic, we should try to keep both of ours in check. *Fortunately, in the stock market, the “tourney” is ongoing and always evolving without an end. Swish!

Bullishness is still excessive. However, the increased demand has expanded into broader sectors/stocks and that could be good for a longer-term uptrend.

The major indexes, by netting all-time highs, are acting like true champions. Clearly in this month of madness the stock market is coming in like a lion. But the question is: will it go out like a lamb? Like a “first round upset?” Putting the Ides aside for a moment, March does have a bit of a negative reputation according to Stock Trader’s Almanac. Keep in mind that this month features a run into the end of the first quarter. Showboating (aka window dressing) should be expected.

Our Current Market Outlook remains “Uptrend Under Pressure” with a yellow light. Our “Core Four” (see top of page) still shows 2 green, 1 yellow and 1 red light with a VIX that is now under its 50-day mav. FYI: The advance/decline lines have had subtle improvement but are still unimpressive. New 52-week lows on the NYSE are at a safe figure.

The trend remains up because the major indexes are trading above their 21-day mav’s. The S&P500 and Nasdaq are currently about 4.5 – 5.0% above their respective 50-day mav’s, so there lies the short-term risk factor.

“Some boast in chariots and some in horses,
But we will boast in the name of the Lord, our God.“  Psalm 20:7 NASB 1995  

Game plan: Bulls: Expect further price progress but brace for full court pressure. Bears: “Where are you?! In the showers?” The trendlines of the major indexes remain properly stacked and over their 21-day mav’s, but are a bit stretched over the 50-day lines. Please pray for Israel and peace in Jerusalem.

* This sentence was added after the original post was published.

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

Have a Triumphant day! ®