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).