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Weekly Economic and Stock Market Commentary – May 24, 2021 – Memorial Day Week

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Note: The US investment markets, and my office, will be closed Monday, May 31st, in honor of Memorial Day.

As for the stock market specifically:

Despite the large moves in each direction last week, the overall net movement showed only modest changes for the week.

Investors seemingly are unable to make up their collective mind as to what to do.

For client holdings, I made up my mind – leave things as they are, unless a particular position is in the condition of not likely to help the financial interest of the owner.

In reality, we aren’t very far from record levels. To me, that means that fears of the financial world coming to an end are overblown.

I really don’t have anything more interesting to say about the markets, so I will apologize for not being more interesting, and simply move on.

We continue to be a market where weakness and strength trade places each week. For the past week, the bullish percent risk indicators rose a bit. It wasn’t enough to change my opinion, but we will take the good news when we get it. The short-term indicators turned positive. I will keep with the recommendation of WEALTH PRESERVATION at this point.

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

Below is where our indicators stand as of May 21, 2021 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The National Association of Realtors gave us the only substantive economic report last week. Their report on existing home sales told us April’s existing home sales fell 2.7% from March levels to a seasonally adjusted annualized rate of 5.85 million units. The report told us April’s sales were the 3rd consecutive decline in sales. Perhaps the law of supply and demand is catching up with the real estate market – as it does with every product and service. The median sales price in April is $341,000 and is the highest on record. The current inventory stands at 2.4 months of sales activity, which continues to be very low.

Finally, the Federal Reserve announced at some undefined point in the future, they will begin to unwind some of the extraordinary measures they started in March 2020. My expectation is that those measures will go from the category of “extraordinary” to the category of “routine” very soon, with the system having a different level of “normal” bond purchases by the Federal Reserve with money they created with a computer program.

If you want more information about a particular stock or mutual fund, please contact me at 973-538-7030 and I will get it to you. Have a happy and safe Memorial Day,