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Weekly Economic and Stock Market Commentary – October 9, 2023


As for the stock market specifically:

The Dow Jones Industrial Average fell back into negative territory for the year before climbing out of the hole with Friday’s gain. It did, however, fall for the week. The good news is that it was the only major market average to do so. The good news came from a substantial gain in the Nasdaq Composite.

In the 1970s and 80s, there was a rock band of some notoriety called the Talking Heads. They had an album that is an apt description of the investment world.

The name of the album was Stop Making Sense. I am not describing what is happening “with our friends in Washington” this week – rather, very little of what I have seen in the stock market in 2023 makes much sense to me.

It is a good thing that I rely upon dispassionate research for the work I do.

Since I brought music into the commentary today, I am going to mix bands and songs to describe “the dark side of the employment report.” The good news will be in the normal area below, after the Indicator Report.

The September unemployment report from last Friday appeared to be good news at first glance. However, what was reported less vigorously was not good. The number of full-time jobs fell by 22,000. Also, approximately 1/3 of the new jobs came from people who took on second, and even third jobs. I believe those items show the economy is not in great shape.

The week’s action pushed the bullish percent indicators down again. The Optionable Bullish Percent Indicator joined the OTC below the 30-yard line. The metaphorical spring compressed more last week. Better times are coming, but I am not smart enough to tell you when. We will let WEALTH PRESERVATION strategies remain in place. The good news though, is that 2 of the 3 main indicators are in ‘washed-out’ territory (below 30%) and the NYSE is very near to it.

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

Below is where our indicators stand as of October 6, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

The Department of Labor announced the US economy added 366,000 jobs in September. That was more than double the amount anticipated by economists. The report I saw did not list revisions to the previous 2 months’ numbers. Average hourly earnings did go up, but not as fast as prices. The unemployment rate rose to 3.8%.

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