Summary
- The Market Momentum Gauges® turned positive again Thursday even as SPY negative weekly outflows were above $2 billion for the third week in a row.
- Weekly MDA Breakout portfolio is up 35.8% YTD and Bounce/Lag Momentum portfolio +25.3% following the signals.
- Long term V&M portfolios are beating the major indices with Neg Forensic +13.2%, Piotroski-Graham value +17.9%, Pos Forensic +18.7%, Growth & Dividend March +4.6%.
- Update article includes Momentum Gauge signals, daily Economic Data, CFO insider trading, Daily Breakout tracker, Fed balance sheet tracker, and Portfolio returns.
V&M Breakout Update - New Bullish Signals
We have new bullish signals starting both for the broad market of 7,500+ stocks and the S&P 500 (SP500). However sectors remain mixed while all improving to the end of this week.
S&P 500 Total Daily Returns
So far into 2023, there is a very strong Friday pattern that accounts for most of the gains on the S&P 500.
SPDR S&P 500 Trust ETF ( SPY ) February-March roadmap shows the first breakout above the negative channel bearish stair steps. Thursday, the S&P 500 opened at the lowest levels since January 20th. The extreme positive reversal that followed was credited to Atlanta Fed President Bostic for remarks suggesting the Fed's record rate hikes could pause... this summer.
FinViz.com VMBreakouts.com
The Daily SPY chart shows the breakdown from the early February 3rd signal and again February 21st. The similarities to the August 2022 topping signal remain strong, as we saw frequent bear bounces on the way to -16.2% declines into September last year.
The ETF momentum gauge trading model switches between Bull/Bear combos following the positive or negative signals on the gauges. Members of my service have seen the following returns from the changing signals. These returns are further enhanced following the early warning signals (not shown).
Long-Term Forecasts for 2023
Forecasts remain unchanged for a bearish outlook based on the impact of QT and rate hikes on markets in all my QT studies from 2018. I have added a new outlook article with the potential for a Debt-Ceiling standoff:
- Largest Market Topping Signal Since August As Fed Considers 50 Bps Rate Hike
- Value, Momentum Breakout View: Debt Ceiling 'Extraordinary Measures' And Fed's QT Program
- Cyclical Rally Faces A February Reckoning
- Forecasting The S&P 500 For 2023: Year Of The Fed-Pivot And More Record Volatility (SP500) .
Short-Term Portfolios / Models
The two weekly breakout portfolios are shown below, along with current 2023 returns. The ongoing competition between the Bounce/Lag Momentum model (from Prof Grant Henning, PhD Statistics) and MDA Breakout picks (from JD Henning, PhD Finance) are shown below with / without using the Momentum Gauge trading signal. The per-week returns equalize the comparison where there were only 16 positive trading weeks last year.
Long-Term Buy/Hold Portfolios
New Dividend picks for March have been released, already up +4.65%.
You can find details on the long term portfolios here:
The Piotroski-Graham portfolios
As members know, all these returns are greatly enhanced using the Momentum Gauges to avoid downturns.
Negative Forensic portfolios
As members know, all these returns are greatly enhanced using the Momentum Gauges to avoid downturns.
Positive Forensic portfolios
As members know, all these returns are greatly enhanced using the Momentum Gauges to avoid downturns.
Growth & Dividend portfolios 1 year buy/hold
Returns shown not including large dividends. The S&P 500 is down -9.3% over the past 1-year.
January Dividend-Adjusted Returns vs. S&P 500
Additionally, the January 1-year dividend adjusted portfolio returns are shown below, beating the S&P 500 by +17.84% last year. 2022 was one of the worst-performing years since 2008.
Prior Years Growth & Dividend portfolio returns
Fed Balance Sheet Tracker
We can confirm the Fed reported another -$38.1 billion reduction in their balance sheet this week, with totals down more than -$468 billion since the week 21 peak last year with a $1 trillion reduction target. The Fed balance sheet has been reduced back to levels in October 2021. We will get the latest balance sheet update every Thursday after the close.
System Open Market Account Holdings - FEDERAL RESERVE BANK of NEW YORK .
Federal Reserve balance sheet reduction, actuals and estimates
The Fed cut their balance sheet another -$38.1 billion this week, with only three weeks with a larger cut since QT started last June.
Daily Momentum Gauge Forecast
The Daily Market Momentum Gauges yesterday delivered the first positive signal since the start of January. We are seeing very similar patterns to the August peak that had a series of bear bounces into lower market levels for September.
Top CFO Insider Buys versus Sells last 10 days
The Top 20 CFO buys/sells activity show extremely low purchase events by all CFOs in the last 10 days. Very few CFOs (8 so far) are buying stocks above the $30k level at what is considered significant purchase level. The changing levels of buying are used as an early measure for a bullish signal, while selling activity remains extremely elevated and in large amounts in a bearish signal.
Typically, lower CFO activity tends to be a risk-off signal with increased market concern. $30k is a key significance level for best results based on my research: CFO Trading Anomaly: Top Buys Beating S&P 500 By 28% Annualized .
I am always monitoring the markets to deliver the best signals and returns with consistent double-digit annual returns the past seven consecutive years. I hope this brief overview of our market models and signals helps you. Follow my weekly updates for more.
All the very best!
~ JD Henning, PhD, MBA, CFE, CAMS
For further details see:
V&M Breakout Update - March 3rd: Market Rebounds Ahead Of Next Fed Hike