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Weekly Economic and Stock Market Commentary: March 7, 2022


Weekly Economic and Stock Market Commentary: March 7, 2022


As for the stock market specifically:

The markets fell again last week. I did a double-take when I saw the international markets more than doubled the year-to-date losses last week, and went from first to third in the year-to-date performance race.

I want to drive home the point that the chart tracks developed international markets, not emerging markets.

Emerging markets are doing worse.

While on the subject of international and emerging markets, all one needs to do is see the performance chart above, and you’ll see why I have avoided both international and emerging market investments for a number of years. That is “relative strength” showing its importance, and illustrates why I use it for our long-term guidance.

For obvious reasons, emerging markets had a bad week last week. The less than complimentary term for this area of the market is “submerging markets.”

A big factor in the movement of emerging markets holdings is the concentration of investments on the Russian Stock Exchange. That exchange closed last week, and emerging market managers suddenly found themselves without liquidity.

We had a couple of very strong days last week, but, obviously, that wasn’t enough to offset the losses from the other days.

The good days were enough to put the NYSE bullish percent indicator on offense for now, but the others remain on defense. That gives a split recommendation of WEALTH ACCUMULATION for NYSE holdings, and WEALTH PRESERVATION strategies elsewhere.

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

Below is where our indicators stand as of March 4, 2022 (Courtesy Dorsey, Wright, and Associates).


So you may be asking, “wealth accumulation” on the NYSE, are you crazy? Please recall, the BP’s are intermediate-term indicators, they can and do flop around in choppy markets. What worries me is that I now see some of my primary long-term indicators rolling over negatively. I can’t say too much in this forum, so please feel free to call or email with any questions.

On a general note:

The Department of Labor provided the important news regarding the economy last week. In February, the US economy added 678,000 jobs in February. That was well above expectations. The report I have does not have the revised numbers for December and January. The unemployment rate fell to 3.8% from January’s 3.9%. Overall, the economy still is short approximately 2,000,000 jobs compared to February 2020. The report also stated average hourly earnings rose by a penny during the month, and 5.1% compared to February 2021. Both numbers on average hourly earnings failed to keep pace with inflation.
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