Good Morning, Well we got the Jackson Hole speech out of the way. I didn’t think that Jerome Powell would have many market pleasing things to say and he did n0t. He simply reenforced that the Fed would increase rates in necessary to get the rate of inflation back to 2%. So far the market reaction has been one of indifference. I personally would have thought that there would have been more selling right off the bat, but at least so for Friday and today that has not been the case. That’s the reason we use charts based on mathematics instead of what we think to make our investment decisions. So where so we go from here? As we close in on the end of August we find the Dow down 3.4%, the S&P 500 down 4%, and the Nasdaq down 5.3%. I doubt that with only two trading days left in the month that any of them will make it back to the green. Our move to the G fund has been a good trade. Our new indicators have allowed us to see clearly once again and we thank God for that. As we exit August we enter the month of September which historically is the worst trading month of the year for the market. That does not mean that it will be this time. I have made money on a few occasions in the month. Again, that is the reason we use charts. However, it does indicate that stocks are more likely to be negative for the month. So we should remain vigilant and not throw caution to the wind. The next market moving event will of course be the September Fed meeting. Investors are split evenly as to whether or not the Fed will raise rates again. They are hanging on every economic report for cluse as what the FOMC will do. At this point it’s a crap shoot. The market definitely wants to rally but it is my humble opinion that it will not be able to have a sustained move higher until inflation comes down. The Fed will not leave things alone until that happens. Can we rally into the new year?? I believe we can and will but we have to get through September and October first. I posted a chart on our Facebook page that gives me some concern for the short run. We follow it based on the Dow theory part of which states that there can be no sustained rally in the market without the Transportation sector moving higher. I have found this to be true most of the time. I watch a lot of indicators to determine which direction the market winds are blowing. In this case I follow ratio between the transportation sector and the utility sector. The transportation sector being bullish and the utility sector being bearish. The chart is simple to read. If it is moving higher then the transportation is outperforming utilities and if the chart is moving lower then utilities is outperforming transportation. Why utilities?? Utilities is considered a safe haven when the market moves lower. It is considered a bond proxy offering a good yield when bonds are moving lower. That’s a whole other discussion for a different day. For now we just need to focus on the simple fact that utilities are a place where a lot of smart money goes during a market downturn. Of course the inverse is true for the Transportation sector. I have found the chart to be keenly accurate and an early predictor of where the market will move. Quite simply, if it turns up then the market will follow, if it moves down then the market will move lower. Here is the current chart:
As you can see the chart is higher today. Is this the start of a new trend? The thing to remember here is that it takes a few trading sessions to establish a new trend. So for now this trend is lower and we will respect it for that and keep our vigilance high. When we see the chart move higher we will start to look for stocks to move higher. Don’t forget, this is an early predictor and any move higher in stocks will normally lag behind a move higher on this chart. The bottom line is that right now given the negative seasonality and this chart I don’t have a lot of confidence in this market. That noted, I will be the first to say that 2022 and 2023 have been wild years so I will take nothing of the table and yet again, that’s the reason we follow our charts. Lord bless
The days action so far has left us with the following results: Our TSP allotment remains steady in the G Fund. For comparison, the Dow is higher at +0.74%, the Nasdaq at +0.73%, and the S&P at +0.64%. It’s a good day for stocks thus far.
Stocks rise to start the week, led by tech: Live updates
The most recent action has left us with the following signals: C-Sell, S-Sell, I-Sell, F-Sell. We are currently invested at 100/G. Our allocation is now -1.58% for the year not including the days results. Our monthly return for the month of August is -2.17%. Here are the latest posted results:
| 08/25/23 | Prior Prices | ||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 17.6749 | 18.3117 | 68.3159 | 68.2398 | 36.8297 |
| $ Change | 0.0020 | 0.0031 | 0.4702 | 0.3316 | 0.0952 |
| % Change day | +0.01% | +0.02% | +0.69% | +0.49% | +0.26% |
| % Change week | +0.08% | +0.28% | +0.85% | +0.11% | +0.27% |
| % Change month | +0.28% | -1.57% | -3.85% | -7.04% | -5.91% |
| % Change year | +2.55% | +0.57% | +15.98% | +10.90% | +8.51% |
