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Weekly Economic and Stock Market Commentary – October 2, 2023

As for the stock market specifically:

September ended. Let’s hope that the selling ended with the new page on the calendar. The month ended with three declines and one advancing market average.

That brings us to October, with Mark Twain’s comment that “October is the worst month for investing, except for November, December, and all the other months.” Long-time readers may be sick of me writing that, but I like it, and that is about as much as I remember from the world of fiction.

“Our friends in Washington” continued with the acting quality normally found in a 5th grade play but did pass a temporary budget. Act 2 of this nitwittery will come near Thanksgiving.

We all have our own political views, but I contend there are enough “of our friends in Washington” in each party that simply want to poke each other in the eye instead of doing what they are supposed to do in a timely manner.

This may be very arcane to most readers, but our federal budget fiscal year used to begin on July 1st. In the 1970s, Congress concluded they did not have the time to conclude the nation’s budget by that time, so they decided to change the start of the fiscal year to October 1st – ostensibly to use that time to complete the budget work.

Last week, AND I AM NOT KIDDING YOU ABOUT THIS, a senator called for the movement of the government’s budget year to begin on January 1st “so they can get their work done.”

I submit to you that no matter when they decide the fiscal year will start, there will be no shortage of jerks (BOTH PARTIES) who will negotiate in bad faith.

Let’s get back to the markets.

According to my weekly distribution charts, “the markets” are almost 50% oversold. That is quite a bit. It could become even more oversold, however at some point I would not be surprised to see some sort of “snap-back” rally. The fun part will be what may happen from there.

The bullish percent indicators fell again last week. The OTC is below the 30-yard line, and the optionable indicator is hovering near it. We will let WEALTH PRESERVATION strategies remain in place.

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

Below is where our indicators stand as of September 29, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Commerce gave us the final report on Gross Domestic Product. The report came in unchanged. I have no further details regarding that report.

The Federal Reserve released its update regarding the PCE inflation gauge. This came in at a seasonally adjusted gain of 0.4% from July. The headlines said this was good news, but the counter to that means prices are rising about 5% per year. The Federal Reserve says it wants inflation at about 2%. “Transitory” inflation?

The S & P CoreLogic Case-Schiller National Home Price Index for July showed an increase of 1% nationally compared to July 2022. On a monthly basis, prices increased a seasonally adjusted 0.6%. The 10-City Index rose 0.9%, while the 20-City Index rose 0.1%.

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