From the Desk of Willie Delwiche

From the desk of Willie Delwiche.

Dynamic Portfolio Update: Gold miners (GDX) are breaking down on a relative basis so we are selling the exposure we have there in the Tactical Opportunity Portfolio and re-deploying that capital to areas that continue to show leadership.

Coming into this week, we’ve seen more new highs than new lows every day so far this year. Improved breadth helped fuel a higher high for the S&P 500. But with the index dropping back into its December range and new highs struggling to expand, the going, for now, is getting rough.

From the Desk of Willie Delwiche.

Prior to this week, we had seen just one day in the past three months with less than 70% of world markets above their 50-day averages. We’ve now had two days in a row with this indicator of global market strength in the yellow zone. 

Why It Matters: The strongest markets have the broadest participation and historically the S&P 500 hasn’t run into much trouble as long as at least 70% of world markets are above their 50-day averages. Risks intensify when this drops below 40%. We discussed this (and other indicators of market stress) in our weekly Townhall as well as the Takeaways summary. 

This is the video recording of the February 16th, 2023, Weekly Town Hall w/ Willie Delwiche.

2/16/23 2:00 PM ET

From the Desk of Willie Delwiche

From the Desk of Willie Delwiche.

The Value Line Geometric Index peeked above its August high but it continues to struggle with sustaining strength. We don’t have evidence at this point of that being a meaningful peak but for now this proxy for the performance of the median US stock is trodding across well-traveled ground.

From the Desk of Willie Delwiche.

Nearly three-quarters of the way through Q4 earnings season, two things stand out: stocks that have reported earnings misses have been less severely punished than in the past and an increasing number of companies are having their earnings estimates for the coming year revised higher. 

This is the video recording of the February 9th, 2023, Weekly Town Hall w/ Willie Delwiche.

2/9/23 2:00 PM ET

From the desk of Willie Delwiche.

Bulls on the Investors Intelligence survey continued to climb while bears fell for the fifth week in a row. The bull-bear spread has now decisively cleared its August high as investors move to embrace the stock market rally.    

From the desk of Willie Delwiche.

The macro factors are all bearish and the market factors are all bullish. It is true that after a bottom market conditions will tend to improve ahead of macro conditions. But it is also true (and we had ample evidence of this last year) that market conditions are subject to false starts. In those situations embracing unsustainable strength can penalize investors. This a trust but verify environment in which indicators of sustained trend have more weighting than one-off signals of opportunity. With the weight of the evidence balanced between risk and opportunity, this may be a time to move toward benchmark exposure,  while focusing on areas of relative leadership and absolute strength.