New Year Blitz Index Update
What is it?
The start of this year is met with the lowest score on the Blitz Index possible. Last month, the prime (interest) rate, Federal reserve policy, and consumer debt all garnered 0 points in terms of the Blitz Index. While those factors still have no sign pointing to add to investments, the stock performance measure moved from two points in November, down to zero. That was because the Value Line Geometric Index (used as a stock benchmark) fell by more than four percent over one week in early december.
Why does it matter?
The Blitz Index is one of the tools that we use to gain insight on the current investment environment. While the Blitz Index shows a very negative environment for investing in the stock market, we still see some opportunity developing. We introduce an allocation to gold and gold miners recently for example. Gold normally does well when Real Interest Rates are falling. We are starting to see that condition play out slowly.
With that said our overall portfolios are slightly invested in the markets. Cash and small payments from owning bond ETFs are more beneficial to own when markets are trending down.
Markets Make a Counter Trend Move
What is it?
Stocks are currently trending downward. However, Thursday they closed up for the day.
“The US Dollar fell on Thursday, with the decline exacerbated by thin market conditions. “**
Why does it matter?
The recent move up in stock prices was met with “thin market conditions.”** When markets move, many investors analyze the stock market’s volume. It is more meaningful for stock prices to move with a large amount of volume. That shows that more investors or larger investment amounts were traded as opposed to if there were low volume. Markets do not move fully up or down all at once or in the same direction for many days in a row. We see this slight upward move as a confirmation that the downtrend will continue since it was not made on a day with much trading volume.**
Other articles we found interesting this week:
Tesla CEO Elon Musk tells workers not to worry about ‘stock market craziness’
Wall St ends firmer, growth stocks lead in thin trading
Here’s How We’ll Know the Tide Has Turned
Current 401(k) portfolio
Our last portfolio reallocation: 5/19/2022.
Want more information?
The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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Sources:
*The Wall Street Journal. “Value Line Geometric Index”. 12/29/2022. WSJ. https://www.wsj.com/market-data/quotes/index/VALUG/historical-prices
**Valeria Bednarik. “US Dollar gives up as Wall Street advances:. 12/29/2022. FX Street. https://www.fxstreet.com/news/forex-today-us-dollar-gives-up-as-wall-street-advances-202212291958
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