November 9, 2023
The latest research, market indicators and trade summaries from Sungarden Investment Publishing
(Return Opportunity and Risk)
If my choices are stocks and cash, what % would I have the stock market right now?
The current ROAR score is
Market in a Minute
The market always tells us a story…we just need to listen!
“You are so close, and I can’t reach you.” That quote from writer David Levithan sums up the S&P 500 as of this writing. A rally from 4,100 to nearly 4,400 (about 7%) in only 7 days was a treat for investors. Or, was it a trick? Hey wait, Halloween is over! Let’s just say the rally may have over-eaten, like we’ll all do in a couple of weeks.
While many pundits drag out the “here comes the Santa Claus rally” talk around the time people are dragging out their decorations, all I think investors want for Christmas is less whipsaw in the prices of stocks and bonds, and thus in their portfolios.
Here’s an updated view of the chart that is my “bottom line” market indicator. As of late Thursday afternoon, it shows the rally suddenly halted, right where we’d expect it to: at the juncture of the downtrend we’ve seen since the summer (blue lines) and the latest “line in the sand,” which apparently is 4,400 on the S&P 500.
But charts by themselves are useless without context. Fortunately, there’s plenty of that right now. The bond market and Fed policy still dominate the market’s attention. So weak auctions of US Treasuries (like today’s 10-year bond event) and Fed Chairman Powell using phrases like “not assured” to describe whether they are on track to smoothly return to lower rates make jittery markets react.
I try to limit this weekly letter to a single chart, so as not to overwhelm. But that chart reflects a much broader market condition: historically-high uncertainty in stock and bond markets, at a time when T-bills STILL yield more than 5%, thus taking the risk out of taking a risk.
Beneath the surface, an ETF I don’t track for investment potential, but I do as a market indicator (EQAL: Invesco Russell 1000 Equal Weight Portfolio), closed today essentially where it was on 12/9/2020. So it is a month shy of 3 years of flat returns. We can look at that as a sign of “value” but I prefer to see it as just more evidence that an outside-the-box approach to research and constructing investment portfolios is very much in season. And will be for a while.
Our ROAR Score remains at 10 for the 8th straight week. That is one shy of the ROAR record of 9 straight, when it was stuck at the 25 level from the end of March through late May of this year. That was a calmer period for the markets than we have right now. But now, as then, the net progress in stock prices was pretty flat.
As I wrote to you 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.
Our 2-ETF portfolio model is 10% SPY (S&P 500 ETF) and 90% BIL (T-bill ETF).
Other quick news and notes:
Our first two ASK ME ANYTHING Zoom video events are set!
Tuesday, November 28 at 5PM Eastern Time
Tuesday, December 12 at 5PM Eastern Time
We’ll be sending a sign up invitation to all subscribers shortly!
I started using the Substack Notes feature to communicate things I notice between formal posts. You can sign up for them or just track them in the Notes tab of our site.
I was quoted in the lead story in Barron’s today.
I was also featured in MoneyShow’s Top Pros’ Top Picks newsletter
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