Newsletter Subject

[Market Outlook] WARNING SIGNS ON THE INCREASE

From

marketgauge.com

Email Address

info@marketgauge.com

Sent On

Sun, Jul 24, 2022 02:53 PM

Email Preheader Text

It was a positive week in both the stock and bond markets as investors stepped back in. Earnings rep

[Company Logo] WARNING SIGNS ON THE INCREASE By Keith Schneider and Donn Goodman [image] It was a positive week in both the stock and bond markets as investors stepped back in. Earnings reports in some sectors (financials) were not as weak as some expected, and there continues to be interim cooling of inflation (gas down the past month). Also, Bank of America’s Global Fund Manager survey shows extreme bearish sentiment readings, a contrarian indicator. Growth stocks (especially consumer discretionary and technology) outperformed value (especially energy related stocks, the big winner so far in 2022). It was one of the few good weeks we have had so far in 2022. As a reminder, in 2007, July hit a new high only to be a precursor of negative things to come (especially in housing). This was the last time we were staring down a possible recession. Many of the negative indicators we explain below were just starting in July 2007. See chart below. [image] This past week several of the MarketGauge indicators gave early signs of risk on. Mish also caught a few positive trades that her subscribers were able to profit from. WARNING: Earnings Misses The recent risk on trend stopped in its tracks on Friday as earnings misses disrupted the recent positive bias. SNAP (Snapchat) reported a huge miss in earnings, and investors dumped the stock on Friday (down 39%), and along with it went other social media giants like Meta (-7.6%) and Google (-5.8%). This sector is plagued by the fact that advertisers are retreating from ad spending on these social media channels. Additionally, communication stocks were hit hard as Verizon (-6.7%) reported a big miss in earnings due to a significant reduction of free cash flow resulting from late paying customers and subscribers leaving for a cheaper alternative. For the first quarter of 2022, 77% of corporations beat their earnings expectations. In anticipation that this trend would not continue, the market sold off. For this recent quarter, it is expected that approximately 66% of corporations will beat their earnings expectations and grow earnings by an average of 4%. As we mentioned in last week’s Market Outlook, with the US dollar appreciation over the past year (approximately 20%), we believe that this will be a major headwind for the earnings of multinational companies. We’ve now seen this with JP Morgan and Verizon. We do not believe earnings will grow 4% nor that 66% of companies will beat estimates. This may be the next shoe to drop in the market’s decline. WARNING: Slowdown in the Economy. We are starting to see the signs many expected from inflation and a slowdown in the economy. We are confident you will remember the many times we have shared with you that the stock market is a forward-looking indicator. We have witnessed a very difficult and downward trending market thus far in 2022. The market has been forecasting that higher prices would lead to aggressive Fed action and an eventual slowdown in corporate earnings. Many stocks, especially technology stocks, are down as much as 50% on the expectation that growth will be slowed or even stopped. Last week we reported on JP Morgan and Morgan Stanley. This week it is SNAP, META, and even the consumer staple Verizon. We are confident that there will be more. WARNING: Stagflation Last week’s column included a chart showing a steep decline in commodity prices since their highs earlier in the year. We suggested that if some of these, like Copper, Lumbar, Oil/Gasoline, and agricultural prices could stay down, we may see a faster recovery. [Click here to see last week’s column.](=) So far, so good. However, as we know from past challenging inflationary cycles (1970’s), these cycles can last much longer than investors may expect. It would not surprise us to see a reacceleration of higher prices later this year as more global supply chain problems could arise. Here are a few recent replays of Mish on national TV discussing the prospect of ongoing STAGFLATION, which will continue to affect Americans. The truest definition of stagflation is when prices rise while growth is subdued. In this environment, we expect the markets move sideways. The best antidote is to develop a “traders” mentality. We can help you do this. [image]( [Why Commodities Can Have a Second Run Higher (July 22, 2022)]() [image]( [Neil Cavuto Asks About Recession and the Labor Market (July 22, 2022)]( [image]() [The Strong US Dollar (July 18, 2022)](=) WARNING: Recession on the horizon? We have said this before: IT DOESN’T MATTER. Whether or not we are in a recession will not change the difficulties of higher prices and economic headwinds we are currently experiencing. However, we are probably in a recession. We’ll learn more next week when the second quarter GDP is announced. This week the Atlanta Fed, (a very reliable source) reported their belief that second quarter will come in at a contracted -1.6% GDP. Add this to the first quarter, 2022 also at -1.6% GDP, and that would pass the formal definition of two consecutive quarters of negative GDP. That may hit the markets hard as many have been arguing we will not see a recession, even though we are probably already in one based on this formal definition. WARNING: Increased Volatility (and Risk) Volatility is a measurement of RISK and variability of prices. Option prices are determined by price and volatility (or risk). We have witnessed a large number of very volatile days with swings of over 1% in the market daily. We have also seen a great number of days that start off negative and turn positive and vice versa. This year resembles 2008 closely, and that indicates to us that wild swings and enhanced volatility will continue. It also implies that we are going to see additional steep sell-offs as earnings are reported, or economic surprises continue. See chart below: [image] WARNING: Fed Action Approaching Have we seen the bottom? Given some of the negative indicators mentioned above not likely. With the upcoming Federal Reserve meeting this week, where it is widely expected that the Fed will raise at least 75 basis points, investors will continue to experience a non-accommodative Fed with rising rates and higher borrowing costs. By intention, this should continue to slow down an already slowing economy. However, on a positive note, the current rally in interest rate instruments looks like a head and shoulder bottom formation. If this pattern breaks out to the upside, it could add some fuel to the short-term upside and even mean that the Fed might be backing off of its aggressive tightening. WARNING: August in Midterm Election Years We are entering one of the worst months to invest in the stock market. While August typically is “slow on Wall Street,” given summer vacations and less volume, midterm years have an even more pronounced malaise as investors are not willing to take a stand as to what economic policies could be altered by upcoming elections. This year is no exception. So, we remind you to be cautious this August as the historical track record is not favorable. See chart below: [image] WARNING: We are in a Bear Market Bull and bear markets can and usually do last much longer than investors expect. Perhaps we were all spoiled in February-March 2020 when we had a torrid sell-off (due to Covid lockdown) only to see the markets recover in a very short time period. It was the shortest bear market we have ever witnessed. On a short-term basis bear market rallies tend to be quick and vicious. Short-term Sentiment and Market Internal indicators are bouncing from oversold levels and could give more fuel to the current rally. Our various trading models are giving mixed signals; hence our risk management process is critical to minimizing drawdowns, and using a blend of them is critical to successful trading and investment. This time will be different. Remember, the biggest investment banking firms are still predicting another 10% or more in downward pressure in the markets. This is not conjecture, but likely due to complicated models they have built factoring in all the above inputs, inflation, earnings, interest rates, economic models, and investor sentiment. Market valuations are all over the place, but some of the most accurate historical gurus have the market going much lower. Part of their analysis also rests with money flows which remain negative and longer-term market trendlines. The S&P 500 finally cleared the 50-day moving average (DMA) this past week for the first time since April. However, please note that both the 50 DMA (blue line) and the 200 DMA (red line), are negatively sloped, indicating that these longer-term trendlines are still trending down. This is a negative for the markets intermediate and longer term, for now. See chart below: [image] WARNING: Thorough information coming your way Yes, this is tongue in cheek, but we have begun a new practice here at MarketGauge where we have extensive Investment Committee meetings on Friday afternoon to evaluate and ascertain the most important and salient points to provide you, our valued subscribers. Click the links below to continue reading this week’s Big View take aways and watch the weekly video analysis [Click here to continue to the FREE analysis and video.](=) [Click here to continue to the PREMIUM analysis and video](=). Best wishes for your trading, Keith Schneider CEO MarketGauge P.S. When you’re ready, here are 3 free ways we can help you reach your trading goals… - [Book a call with our Chief Strategy Consultant](), Rob Quinn. He can quickly guide you to the resources that you'd like best. - Get the foundational building blocks of many of our strategies from Mish's book, [Plant Your Money Tree: A Guide to Building Your Wealth](, and accompanying bonus training. - [Review quick descriptions]( of our indicators, strategies, services and trading systems here. Get more - follow us here... Twitter [@marketgauge]() and [@marketminute]() and [Facebook]( To stop receiving this go [here.]() Got Questions?Office hours 9-5 ET (New York time) Email: info@marketgauge.com Live Chat: Go to bottom right corner of our [home page.](=) Call: 888-241-3060 or 973-729-0485 There is substantial risk of loss associated with trading any securities including and not limited to stocks, ETFs, futures, and options. Only risk capital should be used to trade. Trading securities is not suitable for everyone. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. To unsubscribe or customize your email settings, [click here](). "Market Intelligence at a Glance + Tools For Serious Traders" [Unsubscribe]( MarketGauge.com 70 Sparta Ave, Suite 203 Sparta, New Jersey 07871 United States (888) 241-3060

Marketing emails from marketgauge.com

View More
Sent On

05/12/2024

Sent On

05/12/2024

Sent On

02/12/2024

Sent On

02/12/2024

Sent On

25/11/2024

Sent On

07/11/2024

Email Content Statistics

Subscribe Now

Subject Line Length

Data shows that subject lines with 6 to 10 words generated 21 percent higher open rate.

Subscribe Now

Average in this category

Subscribe Now

Number of Words

The more words in the content, the more time the user will need to spend reading. Get straight to the point with catchy short phrases and interesting photos and graphics.

Subscribe Now

Average in this category

Subscribe Now

Number of Images

More images or large images might cause the email to load slower. Aim for a balance of words and images.

Subscribe Now

Average in this category

Subscribe Now

Time to Read

Longer reading time requires more attention and patience from users. Aim for short phrases and catchy keywords.

Subscribe Now

Average in this category

Subscribe Now

Predicted open rate

Subscribe Now

Spam Score

Spam score is determined by a large number of checks performed on the content of the email. For the best delivery results, it is advised to lower your spam score as much as possible.

Subscribe Now

Flesch reading score

Flesch reading score measures how complex a text is. The lower the score, the more difficult the text is to read. The Flesch readability score uses the average length of your sentences (measured by the number of words) and the average number of syllables per word in an equation to calculate the reading ease. Text with a very high Flesch reading ease score (about 100) is straightforward and easy to read, with short sentences and no words of more than two syllables. Usually, a reading ease score of 60-70 is considered acceptable/normal for web copy.

Subscribe Now

Technologies

What powers this email? Every email we receive is parsed to determine the sending ESP and any additional email technologies used.

Subscribe Now

Email Size (not include images)

Font Used

No. Font Name
Subscribe Now

Copyright © 2019–2025 SimilarMail.