Breakout! It's spectacular...but is it real?
My latest technical take on current conditions
ROAR Score change alert: from 10 to 25
As I wrote last week: markets can change quickly in this modern era, and I won’t rule out adjusting the ROAR Score up, or possibly even down, between now and next Thursday’s letter. Of course, we’ll immediately send out an alert if it changes.
And that’s what is happening today. The ROAR Score is finally moving off of its multi-month home at the 10 level, up to 25. That means that the 2-ETF model portfolio is now 25% in SPY and 75% in BIL.
Premium subscribers: the 4-ETF and 7-ETF model adjustments are detailed in the premium section below, and the shared Research sheet will be updated for those model changes later today.
I like to quote or paraphrase pop culture, and today’s title is from one of my favorite shows, “Seinfeld.” Today was a spectacular rally and it extends a runup since late October that has hints of past “bottoms” of significance. What does significant mean in today’s investment climate? That it could last toward year-end, even into January. Or, it could turn on a dime based on any single piece of news that the market perceives as a “turning point.” That won’t be answered in a day. But I’ll say this:
This is the most powerful-looking stock market breakout I’ve seen for over a year. In a portfolio framework like ours, that is a sliding scale from 0% offense to 100% offense, there’s enough moving in a bullish direction so that 90% defense is not the ideal balance. And that’s what I’m always looking for.
Still, these are not the markets of our parents and grandparents. Again, as I noted last week, this is the time of year where professional money managers may feel pressure to play catch up. Or “chase” the part of the market they didn’t own when the QQQ was soaring earlier this year.
This is a great time to remind subscribers of what ETFYourself truly is. While some may think of us as simply another subscription service offering “picks” to be judged every week or month or quarter, that’s not how we see it. The name ETFYourself, as much as it may inspire some colorful interpretations, means that our aim is to show you, by my leading example, how to research and create portfolios containing ETFs…by yourself!
So as always, use what you read from us as input as you aspire to be your own portfolio manager. I see something a bit different in this latest rally, but I’ll also point out that the S&P 500, which, as I write this, will close near the 4,500 level, has rallied “all the way” to where it was in August of 2021. In other words, the market is flat for 27 months.
If 4,500 sounds familiar, it is because the S&P 500 crossed that level at some point during July, August, September and October of this year. So the real question for equity investors, in a stock market taking orders from whatever happens with interest rates, is this: are the past few weeks just typical “trading range” activity or is this time different? I’ll continue to communicate my latest perspective.
Why this won’t be the last ROAR Score change on a Tuesday: we’re swapping our Tuesday and Thursday posts.
We are going to swap what we deliver on Tuesdays to Thursdays, and vice-versa. Just in time for next week’s Thursday Thanksgiving holiday (though we will post that day). But the major weekly update will be on Tuesdays.
We had planned to do this anyway, as we think it is best to send you our most robust analysis closer to the start of each week than shortly before the weekend. So, this Thursday, we’ll have the full weekly post you are used to seeing on Thursdays. Then, starting next week, Tuesdays will be the full weekly post (and research deck update for premium subscribers), and the ROAR Score’s weekly update will happen every Tuesday (and when needed, like today).
And, starting next week, Thursdays will be what we have been doing up until now on Tuesdays: a shorter, technical analysis and education-driven post. Of course, I’ll be active on the Notes section of Substack, and the Sunday highlights edition continues as-is.
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