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Weekly Economic and Stock Market Commentary – July 24, 2023

As for the stock market specifically:

The markets continued to rise despite some difficult days for the Nasdaq Composite. The Dow Jones Industrial Average had its 10th consecutive rising day on Friday. This is a bit of a contrast to much of the market action earlier this year where the Dow stocks had trouble rising, as the top technology stocks rocketed to strong gains.

This week is supposed to be the height of earnings season for technology stocks. That can lead to some fun (?) moves. We all will have to wait to see the direction and the amplitude.

For those newcomers, I appreciate strong profits in stocks. The difficulty is that profitability does not necessarily have an impact on stock prices. To reiterate, prices move based upon the imbalance of supply and demand.

The good news is that nearly all the indicators are strengthening, which tends to correlate with wider market participation. Wider participation has a history – an IMPERFECT ONE – of small companies doing better than large companies.

Currently, large companies are doing better than small companies.

Another item that will have an impact this week concerns the Nasdaq Composite specifically. The index will undergo a change in weighting. I won’t go into what the changes will be, but, obviously, some stocks will gain, and some will lose based upon the recompositing.

We continue to see gains on the bullish percent indicators. The field position is good, and, particularly on the OTC, there is plenty of room for moving downfield. WEALTH ACCUMULATION strategies remain in effect until further notice.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of July 21, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Commerce gave us a report on the doings of the American consumer in June. The report noted retail sales rose by 0.2% for the month compared to May’s level. That was the 3rd consecutive gain in this statistic. This gain was smaller than in May, and lower than the anticipated 0.34% gain. Furthermore, the gain did not keep up with inflation. Sales were up at furniture, electronics, and online stores. Sales fell at gas stations, hardware stores, and sporting goods stores.

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