I recognize these are incredibly frustrating times.
We had a brutal 3rd quarter! Pressured by several external forces that, unfortunately, we have yet to absorb fully. Oil production cuts in the Middle East, China’s property bubble burst, Europe was in full stagflation, and the rating agency Fitch downgraded the US government debt during the last several months.
This summer reminds me of 12 years ago.
Many of the same problems occurred in the 3rd quarter of 2011. Standard and Poor downgraded the US government. Europe had a painful debt crisis, and markets went completely insane over the summer. The pain eventually ended On October 4th, 2011, when the S&P 500 opened at 1074, and by the end of October, it closed at 1284
That's 19.55% bottom to top, and the pain of the summer was all forgotten.
Fast forward to 2023
The research team and our fancy new software show considerable upward momentum based on various technical and fundamental research, concluding we are still reading risk on, not risk off.
These include the following bullish indicators:
Growth stocks still outperforming value stocks
Cyclical companies outperform defensive companies.
Credit outperforming Treasuries.
Job openings are increasing (August number was an astonishing +690,00 from July)
Unemployment is still at record-low levels.
The above are indicative of a strong economy.
Addition,
Our new DeMark software is reading a powerful buy reading in bonds. Predicting rates will drop dramatically! Stocks are also oversold on the DeMark indicator, indicating a semi-strong buy, enough to be excited about.
I could see a reversal in bond yields, leading us to around 4800 in the SPX 500, which is 12.9 % higher than today (10/2/2023). Progress will be made in the 4th quarter.
Cheers
Christopher Lakian
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