Express Yourself (10/2/23)

Quick thoughts on current markets

Today we are debuting a new feature for all ETFYourself subscribers. Welcome to the first episode of “Express Yourself.” The goal of this type of commentary is simple:

• I analyze markets and charts every day (including weekends).

• On any given day, things jump out at me. That’s what 43 years of charting will do!

• In short format, I’ll cite a few things I find worth mentioning now.

• While most of ETFYourself.com is based on an intermediate-term investment framework (holding ETFs I buy for weeks to months, and sometimes years), I do have 2 trading accounts. One is all ETFs, the other is all options. They are a relatively small portion of my total portfolio (10-15% of the total).

• One of my investing guidelines is to “take big shots with small amounts of money.” So some of the commentary in Express Yourself will be of a more short-term nature than our model portfolios. I might hold something for days or less. It is a combination of “getting lots of reps” and in many cases, considering something a “trade” now but knowing it may come back as an “investment” later.

  

  Photo by John McArthur on Unsplash

So, here’s today’s Express Yourself:

S&P 500: decision time coming up

Upper part of chart (daily prices) indicates that it is about to bust higher or fail yet again, as it did all through September. Bottom of chart shows that the PPO (my favorite momentum indicator) is also at a make-or-breakdown point. That black horizontal line is like a line in the sand based on the recent past.

I can’t believe I bought….an ETF tied to Bitcoin?!

I am not a fan of cryptocurrency investing and all the hype surrrounding it. But I do like a nice chart, and that’s what I saw last Thursday when I bought a very small trading position in BITO. Added to it this morning, as not only is the daily chart looking like a good reward/risk tradeoff, but the 3-day chart (on the right, above) is getting close to being considered the same. But it is crypto-related, so I could drop it tomorrow. The point: ANYTHING can go up in value at ANY time. And in a generally challenging investment climate, “if you see something, trade something.” I saw it, I bought it, I know what the chart will need to look like to prompt me to sell it, and this is never going to be even an average size position. Nor does it need to be, since BITO is so darn volatile to begin with. Wish me luck!

Bond market says, “I’m the captain now”

This is a VERY troubling chart for those expecting long-term interest rates to stop rising. There’s tons of talk in investing media that bonds are a “great buy” here. That’s not what this tells me right now. The bond market is the captain of the current investment climate, and the stock market is likely to be very reactive to what happens there in the months ahead.

In fact, I’ve shouted as loudly as I can all year and last year that investors need to get educated on how to profit from BOTH types of bond markets: when rates go up, there are ETFs that gain about as much as long-term bonds lose. When rates eventually drop (probably due to a “fear trade” in reaction to a financial calamity), there are many ways to profit from that alongside the higher interest income that the bond ETFs would then be paying. I think the bond market will be waaaaay more interesting than the stock market the next few years. That is reflected in our more advanced model portfolios.

That’s all for this first edition of “Express Yourself.” Let us know what you think, and if you like what you are seeing here so far, tell a friend.