Risk Off - Weekly "Signals" Email - 9/5/23
Broad markets were weaker on the week with the Dow off -.71%, the S&P off -1.26%, and the Nasdaq off -1.33%. Treasury yields were higher and gold was down -1.13% for the week.
Trade of the Week
While most of our focus has been individual equities where most of the volatility exists, we also track broad based ETFs. On September 5, 2023, we hit a solid double. We published in our daily post a “Sentiment Index” Zone 4 90% Add/Initiate Signal for VPU- Vanguard Utility ETF with a closing price of just $133.75. By September,8, just 3 days later, VPU was up 2.3%, a solid move for an ETF.
This isn't merely a success story; it's a testament to the unparalleled power of acting on a strong signal for a stock you're either eyeing or already have in your portfolio. While we can't promise a positive outcome every single time, we can definitely tilt the odds in your favor with our “Sentiment Index” rating. This is a prime example of the opportunities you might miss if you're not signed up for our daily post.
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Quote of the Week
The four most dangerous words in investing are: 'This time it's different.'" – Sir John Templeton
Market Pulse
Overview:
After a week of fluctuating data and shifting economic indicators, the market exhibited a modest pullback with major U.S. stock indexes falling between 1% to 2%. The labor market and inflation trends remain at the epicenter of market movements, with concerns about rising inflation, and the future actions of the Fed taking center stage.
Market Moves:
Employment & Inflation Dynamics: Two weeks prior, softer employment data suggested a weakening labor market. However, recent figures depict a more positive jobs picture, shifting attention to potential inflation implications. Investors are hopeful for an increase in employment and a decrease in inflation, though the interplay between these factors is more complex.
Productivity Gains: U.S. productivity increased by 3.5% in the last quarter, marking its highest since 2020, and when adjusting for pandemic distortions, the highest since Q3 of 2017. This rise in productivity could aid GDP growth and potentially dampen inflationary pressures.
Yield Curve: After an inversion of the yield curve observed through 2022 and early 2023, the curve is showing signs of steepening. The curve's movement indicates a possible ending to the Fed's rate-hiking cycle and a brighter economic growth outlook, critical components for a continued bull market.
Cyclical-sector Performance: Since May, the broader stock market (S&P 500) has advanced by 7%, driven mainly by the economically sensitive sectors, a sign of growing confidence in economic growth. However, mega-cap technology stocks have particularly surged.
Commodities: U.S. crude oil prices surged to their highest since the previous November, reaching over $87 per barrel, a nearly 10% increase in the last two weeks, amid renewed oil supply concerns.
China's Trade: In August, China witnessed a decline in both exports (down 8.8% year-on-year) and imports (down 7.3%). In 2023, China's imports have decreased every month.
Market Stats:
Dow Jones Industrial Average: Closed at 34,577, down by 0.7%, YTD up by 4.3%.
S&P 500 Index: Closed at 4,457, down by 1.3%, YTD up by 16.1%.
NASDAQ: Closed at 13,762, down by 1.9%, YTD up by 31.5%.
MSCI EAFE: Closed at 2,077, down by 1.3%, YTD up by 6.9%.
10-yr Treasury Yield: Stood at 4.26%, a rise of 0.1%.
Oil: Priced at $87.28 per barrel, up by 2.0% for the week, and 8.7% YTD.
Other Developments:
NASDAQ's Performance: The tech-heavy NASDAQ index underperformed the S&P 500 and the Dow, primarily due to significant midweek drops in some of the market’s largest tech stocks.
Small-cap Struggle: The U.S. small-cap benchmark, Russell 2000, fell approximately 3.6% for the week and has dropped about 7.6% since July's end. In comparison, the S&P 500 has only fallen 2.9% during the same period.
Inflation Concerns: U.S. stocks faced their most significant weekly decline after an economic report raised fears of surging inflation, which could result in further interest-rate hikes.
Corporate Sentiments: Recent data shows fewer corporate executives are discussing the likelihood of an upcoming recession. The term "recession" was mentioned by just 62 companies in the S&P 500 during the recent earnings calls, down significantly from 238 mentions a year earlier.
The Week Ahead:
Key reports to watch include the Consumer Price Index, retail sales data, Producer Price Index, and figures on export and import prices, among others.
Future Outlook
The market remains sensitive to employment and inflation indicators. While there are signs of sustained growth, rising oil prices and concerns about China's economic health could introduce volatility in the upcoming weeks. Market participants will be keenly observing the upcoming inflation reports to gauge the potential actions of the Federal Reserve.
Weekly Signal Summary (Sells)
Our Sell technology is designed to sell into strength, usually resulting in the underlying security continuing to move higher after the sell. This week we posted 15 sell signals which had a price move of greater than +-1.5%, and of these, 7 or 46.7%% decreased in price after the sell signal, with two off almost 8%.
Weekly Signal Summary (Add/Initiate) “Buy”
For the week we had 15 securities that had a price movement greater than +-1.5% on the week, with 9 or 60% moving higher after the Add/Initiate (Buy) signal, this despite the overall weakness in the broad markets for the week
The DynaLogic strategy is always buying into weakness so it is highly possible the underlying security will continue to decline; however, we feel “Buying on Weakness” is the right strategy to follow in the long run, even if it doesn’t pan out in every instance (no strategy does).
The DynaLogic signals help you know WHEN TO SELL and WHEN TO ADD to the stocks you own or are considering for purchase. Unlike other services, we don’t attempt to recommend stocks or predict what future prices will be. Our Add/Initiate and Sell signals are based solely on historical price movement and pre-established price targets.
Let's face it, market timing is a gamble, and FOMO can derail even the savviest investors. With DynaLogic, you can escape this emotional rollercoaster. Instead of guessing when to buy or sell, our system gives you clear signals. We're talking about a method that allows you to trim your gains methodically, so you can diversify and de-risk your portfolio.
Why the DynaLogic system? Because it turns market unpredictability into your asset. When a stock soars we post a sell signal, it's not a miss; it's the system working. We strategically sell portions, allowing you to stay invested long-term while reallocating gains. No second-guessing, no regret.
Here's the promise: Follow the system, detach from the market noise, and witness long-term profitability. We've got the case studies to prove it.
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Testimonials
The signals come through and overpower my idea of what I *think* I should do regarding my investments.
It is cold, factual and driven by data - quite the opposite of my Extroverted Feeler diagnosis by the Insights Discovery test. Actual quote: "He may jump to conclusions without gathering all the necessary information or taking the time to really understand the situation."
With work and family, taking the time to gather the necessary information about my investments is extremely difficult so I need to find my opposite personality type, "the observer" and have done so with Dynalogic. - Jamie G.
I've been following DynaLogic for a while now. It’s an invaluable tool to use as part of my investing strategy. I find it’s difficult for me to sell stocks when they are rising, only to kick myself when I didn't take gains if it drops down the road. So many publications focus on telling you what stocks to buy but I haven't found anything like this that alerts you when to sell which is really helpful when you can't monitor all your stocks all the time. I've also had some really nice gains off the buy signals too. - Kevin F.
The predetermined buy and sell signals built into the strategy make life easier and a more efficient use of time as the signals take the emotion out of the equation. Terry S.
I've been using DynaLogic for 6 months now. I've already seen a big impact and it's provided me a roadmap for sound decision making. The best part... I am not one that is trying to make the decisions. I've spent far too many years guessing what to do with my investments based on what feels right. This lays it all out in a simple way and tells me when and how to make decisions. Wesley L.
After reading, then sleeping on it, then rereading, the mathematics make good sense. Thanks for saving me from my emotions 🙂 – Dale R
I've been following for a while and just observing, I've missed out on major increases, while losing 20% trading on my emotions, I could've tripled that amount in gains if I followed your signals!
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