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Weekly Economic and Stock Market Commentary: July 5, 2022


As for the stock market specifically:

The buyers on Wall Street appear to have taken an early vacation, as the buyers’ strike resulted in losses for the week. I haven’t tracked the frequency of losing weeks compared to winning weeks, so this statement may be a bit off, but, if memory serves, losing weeks have occurred in 10 of the past 12 weeks.

Once again, technology stocks led the decline.

In any event, there are some things that are clear for 2022. First, this is the worst 1st half of the year since 1970. Second, we now are in a relative strength stage where growth is weaker than value. That is true in all the market areas I examined. Third, this is another time when market returns are not favorable when the bullish percent research indicators change direction many times in a short time.

Since this is a holiday week, I am going to keep this one short.

While our intermediate-term indicators are in X’s as shown below, please recall our rarely discussed long-term indicators remain defensive. Any moves in this environment should be treated as “trades” and not necessarily investments. It is always my hope that a trade becomes an investment that we can hold for years to come, and often enough this does occur. However, in this today’s environment, I would be cautious with making large commitments of capital until we get confirmation from the slower-moving (ie: long-term) indicators.

Remember, Xs mean OFFENSE or wealth accumulation, while Os mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of July 1, 2022 (Courtesy Dorsey, Wright, and Associates).

On a general note:

In the spirit of keeping it short this week, the Department of Commerce reported first-quarter Gross Domestic Product declined 1.6%, at an annualized rate. This is lower than the consensus estimate of economists, and a downward revision of the prior reports.

Let’s talk. Email me at philip.rongo@ibexwealth.com.