Weekly Economic and Stock Market Commentary – August 21, 2023
As for the stock market specifically:
The markets underwent the third consecutive week of losses. All the major market averages fell more than 2 percent.
Let’s get into some important items I saw last week with the US markets.
First, the major market averages each fell a little more than 5% from their recent highs. As I stated many times here in the past 22 years of writing this commentary, that is something we should expect to occur 2 or even 3 times each year. The answer to the obvious question is “I don’t know how much lower it can go.”
The next thing that happened comes in the direction of the percentage of stocks in a positive trend. That indicator changed directions into a column of Os last week, and it fell below 50%.
In English, more than one-half of the stocks on the NYSE have given up the status of being in an uptrend and reversed direction into a downtrend.
Stocks don’t go into a negative trend without prices going down.
Third, the bullish percent indicators all turned negative. As you’ll see below this brings the defense on the field.
Going to my metaphor of choice – a spring – we find ourselves in a situation where the spring is somewhat compressed, currently standing at ~ 20% “oversold” based on the NYSE weekly distribution.
We know from the prior paragraph that I recommend WEALTH PRESERVATION strategies at this time.
Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.
Below is where our indicators stand as of August 18, 2023 (Courtesy Dorsey, Wright, and Associates).
On a general note:
The Department of Commerce released the news regarding June’s retail sales. Retail sales rose by 0.2% during the month and was the third consecutive month for rising sales. Once again, the demise of the American consumer has been exaggerated. People spent more on furniture, and electronics, while grocery stores and gasoline sales waned.
If you have questions or want more information about a particular stock or mutual fund, please contact me.