Market at a Glance - 6/29/2023
By: Christopher Mistal
June 29, 2023
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Please join us for an Almanac Investor Member’s Only discussion of recent market action and NASDAQ's Seasonal MACD Sell with time for Q & A at the end. Jeff and Chris will cover their outlook for July, review the Tactical Seasonal Switching Strategy ETF, Sector Rotation ETF, and Stock Portfolio holdings and trades. We will also share our assessments of the Fed, inflation, recession prospects, the "Worst Months" as well as relevant updates to seasonals now in play.
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Market at a Glance
6/29/2023: Dow 34122.42 | S&P 4396.44 | NASDAQ 13591.33 | Russell 2K 1881.59 | NYSE 15737.38 | Value Line Arith 9317.74
Seasonal: Bearish. July is the first month of NASDAQ’s “Worst Four Months.” It is also the third month of DJIA’s and S&P 500’s “Worst Six Months.” Although July is the best month of Q3, it has historically been weaker in pre-election years. First half of July historically stronger than second. Summer volume doldrums often commence with Independence Day celebrations.
Fundamental: Murky. Although Q1 GDP was revised higher to 2% earlier today it is still softer than the 2.6% pace recorded in the previous quarter. The trend of slowing growth is also reflected in Q2 projections. Atlanta Fed’s GDPNow model is currently at 1.8% for Q2 as of its most recent June 27 update. Inflation metrics are cooling but remain elevated increasing the odds of additional interest rate increases. Corporate earnings are a mixed bag. One silver lining, according to official metrics, is the labor market. Unemployment was 3.7% with 339,000 net new jobs added in May.
Technical: Consolidating. After breaking out to new 2023 highs in June, DJIA, S&P 500 and NASDAQ all retreated modestly. NASDAQ’s mid-year rally officially kicked off earlier this week and historically runs until around the ninth trading day of July (7/14 this year). When the mid-year rally fizzles out, more choppiness is likely.
Monetary: 5.00 – 5.25%. The Fed did pause in June, but it then proceeded to signal it is not likely done increasing rates. With year-over-year CPI, PPI and PCE below Fed funds rate, monetary policy appears restrictive now, but the full impact of the quickest rate increases in decades is still unclear. If the Fed wasn’t fighting substantial federal government spending, its goal of achieving a 2% inflation rate would likely be accomplished much sooner.
Sentiment: Retreating. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors stand at 50.0%. Correction advisors are at 31.4% while Bearish advisors numbered 18.6% as of their June 28 release. Bullish advisors peaked shortly after the market did around mid-June at 54.3%. However, they did not switch to bears. Instead, Correction advisors expanded. It would seem our seasonal research is gaining traction with more advisors as we also see little more than a mild correction during the “Worst Months.”