Blitz Index Update
What is it?
Over the last month or so, the stock market had a modest gain before consolidating. In other words, markets were up going into last month but then volatility declined so markets didn’t move up or down abruptly. Since the writing of our last Blitz Index update, the rise in stock prices adjusted the Blitz Index score from zero out of ten to be two out of ten.* Even at that score the Blitz Index suggests to be completely out of the market.
Three components of the Blitz Index maintain a score of zero points. Those are impacted by: adjustments in interest rates, actions by the Federal Reserve, and consumer debt. Interest rates remained higher and the Fed continued its fight against inflation. Consumers also had higher debt in the latest monthly data than they did a year ago.**
Why does it matter?
With a current score of two, if conditions change then the Blitz Index could be signaling for us to get further invested. However, if markets struggle and prices drop on a week to week basis, then we could move back to a score of zero.
With the Fed meeting this Wednesday, there is a possibility that they could lower interest rates. While that is not expected, we are cognizant that the unexpected can still happen. We are not making any large adjustments to the portfolios before the Fed Meeting on Wednesday. We are confident in our current positioning and our ability to adjust portfolios as conditions change.
Other articles we found interesting this week:
Investors are making the wrong bet on a recession — and it’s going to cost them big time
JPMorgan Chase’s Dimon says ‘this part of the crisis is over’ with First Republic deal
Fed is set to raise rates yet again. After that, then what?
Current 401(k) portfolio
Our last 401(k) 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:
*WSJ. “Value Line Geometric Index”. 5/1/2023. The Wall Street Journal. https://www.wsj.com/market-data/quotes/index/VALUG/historical-prices
**St. Louis Fed. “Non-revolving Consumer Credit Owned and Securitized”. 5/1/2023. https://fred.stlouisfed.org/data/NONREVNS.txt
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