Special Bulletin: March 20, 2024 (3pm Update)

 Back to Green, but don’t get Comfortable

All-time highs are hardly the place where an investor should get aggressive. Having said that, if you think about it, the stock market has been hitting ATH’s our whole lives. At least that is the mantra of the “buy and hold” crowd. Traditionally stock market outcomes show that new highs beget new highs… until they don’t anymore.

While the statement that says the stock market has been rising our entire lives is indeed true on the surface, it is an oversimplification and dismisses the real risks facing investors capital during certain periods in history, and occasionally for extended periods of time.

Sometimes emergencies happen: a loss of work, health issues, divorce and even death. When those life events strike, they are made even worse when risk management disciplines are not utilized in the middle of a recession or a bear market. So, while markets do come back (even Japan finally has after over 20 years!!), to just blindly buy and hold can create a real vulnerability for certain investors over their lifetime. Our TPM dual mandate of protecting capital during downtrends and growing it during uptrends remains an important strategy for investors who need to preserve their capital while desiring to also grow it to fight the effects of inflation.

Today’s action in the stock market is responding favorably to the Fed’s reiterated expectation of 3 rate cuts coming yet this year. “Hoorah” for the Fed! And with no “violent-3” having happened on Monday, up they are going today.

Our Current Market Outlook is being upgraded to “Market in an Uptrend” with a green light as of 2:30pm (SPX 5,195.02). Our “Core Four” (see top of page) still has 2 green, 1 yellow and 1 red light but now with a VIX that is falling under its 50-day mav. FYI: The advance/decline lines remain unimpressive but look to be improving thus far today.

Will tomorrow prove to be the “opposite of the Fed” day again and usher in a new round of selling that finally produces the widely expected test of the 21 & 50-day mav’s? We shall see in short order. FYI: If the market doesn’t keep going higher from here and reverses quickly, our C.M.O. signal would quickly revert to yellow.

Regarding the extremely high level of investor optimism (sentiment), it is important to understand that that technical indicator is often early, and that it does a better job at identifying bottoms than it does tops in the stock market. They say it takes a long time to stop a speeding freight train. The same is true of a bull market. The last time this indicator spoke this loudly was in the summer of 2021 and the market grinded higher for a few more months before peaking in Nov/Dec.

Remember that tops are a process. There aren’t many of the necessary ingredients coming together yet that would indicate that one is eminent. But it is no doubt closer than it was yesterday. That’s kind of like the “rapture.” 

As we have been stating, the major trend remains up as the key indexes are still trading above their 21-day mav’s. Be alert. Expect the market to grind higher from here for a while but be prepared if it begins to falter.

“I love You, O Lord, my strength.”
The Lord is my rock and my fortress and my deliverer,
My God, my rock, in whom I take refuge;
My shield and the horn of my salvation, my stronghold.
I call upon the Lord, who is worthy to be praised,
And I am saved from my enemies.   Psalm 18:1-3 NASB 1995

Game plan: The trendlines of the major indexes remain properly stacked and over their 21-day mav’s, and so the uptrend continues. See if tomorrow proves to be an “opposite” day. Please pray for the peace of Jerusalem (Psalm 122:6-7). May they prosper who love her.

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

Have a Triumphant day! ®