We recently stated that you should look for signs of distribution within the stock market. It is your clear warning that a drop is coming. Maybe the people who get to declare whether the economy is in bloom or recession, will raise the dreaded recession flag. We stand by our "stealth recession" call.
Life
We believe the level of your living standard is the final answer about an economy. The stock market is used as a barometer by government to reflect the economy. It is not. When you go to the grocery store and you cannot afford meat or fish only to see that vegetables are expensive too, you realize that it is difficult to make ends meet. When rent eats up 40 to 50% of your income, you realize that is is difficult to make ends meet. You fill-up your gas-tank because the price has dropped and you fear that it will spike again. This is how most Americans live. We may have some stocks, but whether they rise or fall, we do not sell unless it is an emergency. Stocks are treated like out home. They are part of our nest egg.
Stock Market
It really has nothing to do with Main St. The retail customer does not move the S&P 500 index. It is hedge funds, institutions and wealthy investors. At the moment, these people believe that the Federal Reserve is through with interest hikes. This has caused the recent rally in the market. The "Magnificent 7" accounts for almost 30% of the S&P index. This is the wind to the market's sails. In addition, the Bulls are putting the squeeze on the Bears. This is always a problem for true value. Stay strong!
Highs and Distribution
When you look at a weekly chart of the Dow, the recent rally is only back to the August level. It is the same for the SPY. If you look at the Transports, they are less than half of the August level. This is disharmony. The volume is strong, but the price swings are muted. This is a sign of distribution. Then, we read where Zuckerberg (META) is selling shares as well as the Nvidia (NVDA) CEO. There are others, but they have not declared to the media. The only way to know is to wait one month. Then, anyone or firm holding 5% must report their investment levels. With that said, it is possible with the "Santa Rally" for the market to hit a new all-time high. See other reasons above.
At last count, analysts are on record believing that there is a 70% chance for the Christmas rally. Dear Reader, we remind you that all of the market crashes appeared just after the market hit a new all-time high. The Federal Reserve will announce their last decree for 2023. We expect no change. One reason: they do not know what to do. They hope for a soft economic landing. Then, they will claim success. If not, they will say we have a plan. Everything is under control. They control the media. However, we favor our holiday song, End the Fed!
Our Holiday Wish
Let's all hope and pray for peace in the Middle East and Europe and as always, we wish you peace.
