”Don't you know promises were never meant to keep? Just like the night, they dissolve off in sleep ...“— The Rolling Stones
February was a month of heartbreak and hangover. March may prove to be more sobering.
“It looks like we had a false breakout to 4,200 in the Standard & Poor 500 index,” writes our friend Sean Ring, looking at the charts through February 14, 2023. “We headed right back down after that. We’re stuck in the 3,800 to 4,100 range. A breakout either way next time should show us the way.”
Sean then ran through a litany of market sectors suffering from February’s hangover.
Have we crossed a critical tipping point? The definitive Mr. Ring believes there will be a breakout… but stopped short of declaring whether it would be to the upside or down.
“At the present moment,” our investment director Zach Scheidt agreed. “It really feels like we’re in the ‘in between’ no man’s land,” he wrote to our analysts this morning. “We were fearful at the end of last year and it made sense to buy quality stocks that were unfairly punished. Now that the market has rallied and people are willing to take more risk, we’re not nearly as fearful as before. But I don’t see exuberance or widespread froth.”
That being said, Zach recommends we “chew our food for a bit before swallowing”:
It’s hard to call the February capitulation a full ‘breakdown.’ The S&P 500 pulled back to its 200 and 50 day averages. That’s pretty reasonable.
Meanwhile speculative tech stocks have been much weaker. But this makes sense (and should happen). I still think a lot of these names (AI, cloud stocks, some of the old work-from-home plays) have much farther to drop.
So it’s a kind of bifurcated market. Opportunities in stocks that trade at reasonable valuations with reliable profits, and risk for speculative stocks that trade at high valuations (or have no earnings).
For now, as we discussed in our live webinar last night, (replay available here), we’re on high alert. Was, as we have suggested, February 14, 2023, the tipping point triggering a “market crash in early 2023”?
You know where I stand. What do you think? Send your thoughts, here.
So it goes,
The Wiggin Sessions
P.S. In the meantime, while we wait for some confirmation of the market trend, listen to this peculiarity:
For the first time since 2001, investors can make more money “holding cash” than a traditional stock-bond portfolio. Yesterday, the so-called 60/40 portfolio of US equities and fixed-income assets yielded 5.07%.
At the same time, yield on the six-month US Treasury bill rose to a high of 5.16%. Short-term treasuries are considered “cash-like” holdings. You can thank the Fed for that… more is likely to come when they decide to continue raising rates later this month.
Addison Wiggin is an American writer, publisher, and filmmaker. He was the founder of Agora Financial and publisher for 18 years. An acclaimed New York Times best-selling author, his books include: Financial Reckoning Day, Empire of Debt, The Demise of the Dollar, and The Little Book of the Shrinking Dollar. Addison is also the writer and executive producer of the documentary I.O.U.S.A., an exposé on the national debt, shortlisted for an Academy Award in 2008. He lives in Baltimore, Maryland with his family. Addison started his latest project, The Wiggin Sessions, powered by Consilience Financial, in March 2020. He films from a homegrown studio in his basement.