The struggle for markets to find an uptrend continues as the bank sector provides plenty of storm clouds, the near-term future of the economy is completely uncertain, and the Fed continues to fight the last fight (aka inflation). (more…)
The tumult over the past week+ in the banking sector has taken over financial markets. We are publishing two good overview articles of the action. Our view is simple: markets are prone to emotional outbursts swinging between fear and greed. Rather than get caught up in the emotions of the moment, we have long found it more profitable to distill market action down to a few simple inputs related to price and volume. Are market participants, in aggregate, buying or selling, and to what degree. Our models then take a position based on decades-long analyses of the price-volume data, a period incorporating very many emotion-driven markets, both up and down. (more…)
Though interest rates get all the headlines, changes in the supply of money can have substantial impacts on the economy and asset prices. Below is Delta’s analysis of changes in the supply of money and how that might impact inflation.
“The January money supply declined by 1.7% versus a year ago. Money supply (M2) is a measure of money including coins, currency, check and savings deposits, travelers checks and money market deposit accounts. This is both the biggest yearly decline and the first time ever it has contracted in consecutive months. The monthly rate of change has been falling consistently since mid-2021 when it peaked at a 27% growth rate. (more…)
Below are a couple of articles about markets and the economy we thought you might find interesting. First, Delta Research talks about the benefits of higher interest rates. Second, Franklin Templeton’s ClearBridge Group discusses how housing as an economic driver has evolved from the period of the Great Financial Crisis. (more…)
Below, our friends from Delta offer a summary of recent data which shows the economy being stronger than many expected. But that strength is pushing interest rates upward in a renewed push. The upward thrust in rates could well undo the stock market rally so far in 2023. Broad market analysts remain very split over the outlook for the economy and markets. We think now is a particularly important time to have a tactical approach to investing, with the ability to quickly adjust to changing conditions. Our models offer just such an approach. (more…)
Below is the most recent update from Schwab with a focus on corporate earnings season thus far. Schwab has maintained a cautious stance in recent months believing that markets were fraught with more risk than investors were pricing in. Investors face a ton of dissonance right now with outlooks from various experts all over the place. There is a complete lack of agreement; hence, uncertainty for investors amid the possibility that the strong move so far in 2023 has largely been a short-covering rally rather than any concerted fresh buying by optimistic investors. (more…)
Below, we augment an article by Lance Roberts considering the conundrum investors face re: a strong stock market in the face of lots of recessionary indicators.
“Despite mounting evidence supporting recession forecasts, the stock market remains at odds with that outlook. That leaves investors in a predicament of avoiding a further drawdown in stocks but also not wanting to miss out on a potential recovery. (more…)
Back in January 2013, the Stock Traders Almanac created the “January Indicator Trifecta” by combining three indicators that occur over a five week period: 1) the Santa Claus Rally indicator, 2) the First Five Days Early Warning System and 3) the full-month January Barometer reading.
When all three of the “January Indicator Trifecta” readings are up the S&P 500 has closed the year with a gain 90% of the time, 28 of 31 years, with an average gain of 17.5%.
When any of the three are down the year’s results are reduced.
When all three are down, the S&P is down almost half the time (down 3 of 8 years with an average loss of -3.6%). (more…)