The wait is finally over in the bull vs. bear market, and it looks like we have a winner.
After being rangebound for the past five months, we finally have our answer on the overall direction of the U.S. stock market as we head into the end of the year, and that direction is lower. All major indexes have broken through significant support levels, placing the bears firmly in control for now.
The past month or so has affected portfolios. The S&P 500 has given up over half of its gains this year (well back into the single digits), while the Dow Jones Industrials and the Russell 2000 Small Caps are suddenly down for the year. Thank goodness for the Big Eight (Apple, Amazon, Google, Facebook, Microsoft, Netflix, Tesla, and Nvidia) propping everything up, or the U.S. stock market would be in rough shape.
With the selling over the past couple of weeks, the market is deeply oversold (Fear and Greed Index in Extreme Fear) on a short-term basis and due to some sort of relief rally. But unless the S&P 500 and Nasdaq 100 Index can giddy up and reclaim their prior ranges, most equities are likely heading lower into the end of the year.
Just remember the ‘stock market’ is a market of individual stocks, and not all individual stocks move with the market. Energy, precious metals, and other commodities, along with utilities and consumer staples (things we have to buy no matter the shape the world is in) can oftentimes move to the beat of their own drummer, so we will be on the lookout for opportunities there. We will also have an eye on some limited shorting opportunities if the bears find their legs.
As we continue to watch the bull vs. bear market, we won’t get too crazy (unless we see the perfect pitch right down the middle of the plate…). We will concentrate first and foremost on managing risk, and holding tight to a lot of good old cash.
The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.
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