MARKET UPDATE APRIL 2023

The market continues to be stuck in the same sideways pattern that we have been experiencing for the last year. The last month for the market has been positive, however. The S&P 500 has moved up from being down 18.7% in mid March to down 13.2% as of Friday, April 14th. We have moved nicely above the midpoint of the trading range.

A nice uptrend is also emerging since the October lows. The upper range of the channel below equates to a price for the S&P 500 of 4,280. From Friday's close of 4,137, the index would reach 4,280 with a 3.5% move higher. This would be a bullish sign for the markets.

Throughout 2022, we have been comparing this bear market with the bear market of the 1970’s. The graphs line up well as you can see below, and the seventies were the last period where we experienced high rates of inflation. The 1970’s market continued to decline from this point. It bottomed out with a price drop of 45%.

This year’s market is beginning to separate from the 1973 trend - another positive sign.

The market seems to be thinking that the economy can achieve a soft landing. The most recent inflation trends have been positive but inflation still remains well above the target of the Federal Reserve. Depressed prices for bank stocks and gold reaching its all time high tells us that there is still a lot of risk in the markets.

We remain cautious but our model has recently moved from high risk to medium risk. We are 50% in stocks and 50% in money market funds at the moment.

The reality is that no one knows if the worst is over or not for the stock market. Because of the uncertainty, it is important to follow a disciplined approach to stock market investing. Our approach to investing relies only on quantitative measures of actual price trends. We make no predictions about which way the market will head in the future. We simple react to what the market is telling us and can make money if the market goes down or if the market goes up. Stay disciplined, my friends.

Happy Investing,

Phil

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