[Market Outlook] Which Way Are We Headed?

The Market’s Positive Signs [Company Logo] Which Way Are We Headed? The Market’s Positive Signs By Donn Goodman and Keith Schneider [image] Good day Gaugers. We all hope you are enjoying these warm summer months (in the US, maybe not where you are?). Perhaps your own profitability from the stock market is helping you to enjoy this positive period even more. We congratulate you if you are diligently following some of the MarketGauge investment strategies that are performing well and making your task of successful investing that much easier! We are grateful and humbled by the many positive accolades we receive weekly. Our mission is to not only create investment success for do-it-yourself folks, but now we have fully transitioned into being able to do it for you and assist you in managing your precious assets or retirement funds. Our goal is to make it easy (and effortless) for you to execute our proprietary quant-driven investment methodologies for your long-term investment success. What’s the Stock Market’s Next Move? Fortunately, for the past few months, we have provided much more positive input in your investment game plan and have backed these constructs with countless charts and graphs. In looking back, probably the charts from Ryan Detrick of Carson have been the most accurate and helpful as they showed what the market tends to do after being up 10% in the first few months. Fear continues to dominate some of the financial publishing rhetoric. I remain baffled and amazed at the large swath of writers who continue to offer a negative view even while the market makes new 52-week highs weekly. Many of these prognosticators were correct in 2022, consistently warning that we were about to see a bear market. They earned some credibility, and readers began to hang on to their every word. But many have been wrong in 2023! The problem with their numerous negative theses is that the stock market (and earnings) tend to go up 70% of the time. Additionally, as we have pointed out here, week after week, we are in a pre-election year. The bias for the 3rd year of a Presidential term has been positive (since 1950 100% of the time). See chart below (chart which I helped create from my old firm, Atalanta Sosnoff Capital) [image] The Signs Remain Positive No matter how much fear the writers, talking heads and negative financial publishers say, the market continues to grind higher. More importantly, the underlying health of the market has continued to improve these past few months. Yes, we may see a much-needed consolidation or correction soon, but most of the signs suggest that it may be shallow. Additionally, signs of a recession have not (yet) MATERIALIZED and while we may be pushing that off into some future moment (like 2024), this past week’s GDP of 2.4% growth handily beat the 2.0% expectations. See chart below: [image] It is important to remember there is approximately $4 trillion in infrastructure, CHIPS, and anti-inflation bills were passed during 2021-20222and much of that money has not yet found its way into the economy. No matter how much the Fed raises rates, how much Quantitative Tightening the Fed imposes, we are still awash in new monetary stimulus coming from the Federal Government. Add to that, existing COVID money that remains in the economy, and you have the recipe for a continuing tight job market while consumers are still actively spending. Retail and consumer spending are holding up some parts of the economy. Here are other signs that the stock market is on solid footing: (thanks to LPL for producing great research this past week). 1. Broadening participation. The narrow leadership (the magic 7 stocks) no longer holds true. The Equal Weighted S&P 500 index (RSP) is now closing the gap: [image] 2. We went from bad breadth to good breadth. The average stock in the S&P 500 is now trading above its 200-day moving average. This is a sign that breadth has improved and is positive. Should we go into a correction, it will take a lot to start knocking these stocks down when the breadth is so positive. See each industry group below with a comparison of November 2022 to now (July 2023): [image] Below, we also provide a view of the S&P 500 index (all 500 stocks) above the 200-day and 50-day moving averages. These charts continue to show a positive and expanding bias... We consider the positive blue slope to be a guide to take a position of “risk-on”. Charts for the S&P 500, DIA, NDX and the NYA will soon be available in the MarketGauge Pro offering an enhanced Big View Pro. # of Stocks in the S&P 500 above their 200-day moving average: [image] # of Stocks in the S&P 500 above their 50-day moving average: [image] There is little doubt that the number of stocks above these vital moving averages is getting a bit stretched or overdone (as compared to similar periods in the past). A period of consolidation or even a correction may be helpful to take some of the “froth” out of the market. 3. The Advance-Decline line remains positive and is showing good health for the markets as well. The chart below shows the two-year cumulative advance-decline (A/D) line for the SPX. The line is calculated by taking the difference between the number of advancing and declining stocks in the index for a given trading day and adding that difference to the prior day’s value. A rising A/D line is indicative of positive market breadth (as shown above as well) as the number of advancing stocks is outpacing the declining stocks. [image] 4. Participation is Global. Use the links below for more positive signs for the market, reports of the performance of our top trading systems, and the Big View bullets and video by Keith. [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, Donn Goodman CMO, Market Gauge Asset Management 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. 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