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Weekly Economic and Stock Market Commentary – March 6, 2023


As for the stock market specifically:

An interesting aspect to this time of year comes in the form of weather changes without notice. For the next six weeks or so, we will oscillate from cold, damp weather to bright and sunny without notice, and then back. The stock market must be taking clues from the weather by changing seasons almost overnight.

The sun did shine on investors last week, and all the major market averages moved strongly higher. As is common, I don’t have an intelligent answer as to “why” this happened, especially in front of this week when Federal Reserve Chair Powell will testify in front of Congress but will offer an explanation with my favorite metaphor.

About three weeks ago, the spring was stretched well to an overbought condition. Since springs act to counter extreme conditions, sellers came in to relax the overbought condition, and bring it first back to a neutral condition, and now, to a slightly compressed condition.

There was a decline in the bullish percent indicators last week. The OTC indicator turned negative. We start the week off in WEALTH mode across the board.

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

Below is where our indicators stand as of March 3, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The S & P Core Logic Case-Schiller Home Price Index came out last week with data for December. The data continued the recent pattern of showing price increases slowing in the housing market. The year-over-year gains came in at a rate of 5.8%, well below the November 2021 to November 2022 increase of 7.6%. The index fell 0.8% for the month.

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