To The Moon

Since its the weekend Sunday, I thought I will post a more introspective piece as I gather my thoughts with “end” of April in sight.

Away from relying on Moving averages (ma), Relative strength index (RSI), xxx etc what can we sense ?

Needless to say, the US market has been on a roller coaster ride since the beginning of 2023; especially in Mar 2023 with the banking sector debacle in full play.

Using S&P 500 as the "model" index

From the above diagram, its “amazing” how quickly the composite index “recovered” from the banking fiasco and has trended upwards since.

Any newbies entering the US market for the first time would’ve been fooled by such resilient recovery except that it is really not so, if we scratch just a bit deeper.

(1) US Inflation

With the latest official data / report delivered up until April, it is safe to conclude that US inflation has begun to fall gradually.

However the central bank still feels that it is not falling “fast” enough for their liking due to the buffering effect from the tight labour market.

(2) US Interest Rate

As mentioned in my last Fri, 21 Apr 2023 post (click here to read ! ) the Fed members have hit the ground socializing overall on what they intended to do come May FOMC meeting.

In the market, the probability of the Fed raising interest by another 0.25% has hit 71.2% already. Looks like a “done deal” to me.

If it’s implemented as expected, it only means the costs of doing business has just gone up by multiple notches due to compounding effects as its passed from one supplier to another.

(3) US Job Market

Report for week ending 15 Apr 2023 (Sat)

For the week ending 15 Apr 2023, weekly US jobless claims has risen to 245,000 from last week’s of 240,000 that amounted to a +2.08% increase.

With the Tech giants ( $Meta Platforms, Inc.(META)$ , $Alphabet(GOOG)$ , $Microsoft(MSFT)$ , $Amazon.com(AMZN)$ ) April’s undertakings to further “right-size” its workforce - would the latest round of let-gos help to loosen the labour’s tight grip on the market ?

(4) US Market Myth of May

The saying "Sell in May and go away" is a trading adage that advises investors to sell their stocks in May and then buy them back in November.

The premise behind this strategy is that the stock market tends to perform worse during the summer months than winter months.

Actually, if we research a little more the trading adage seemed to have been borrowed from an old English saying - "Sell in May and go away, and come on back on St. Leger's Day."

St. Leger's Day is a horse racing event that takes place in mid-September.

How I See The Above Signs ?

First and foremost, it appears to me that the stars are aligned for the above-mentioned pointers. They are “right” where they are supposed to be.

Assuming true - it really mean that US might be slipping into “recession” from May onwards; although some economists have argued that the US is already in the midst of recession, contrary to what the Biden administration has categorically denied.

More importantly, for individual investors like us (like me) - does it mean that we should “hold our horses” now and think about this for a moment?

Does it make sense to be patient and not get too caught up in the daily fluctuations of the composite indexes and the individual blue chip stocks that we are monitoring ?

When recession arrives, coupled with Economists and Wall street analysts drumming the same tune to further dampen the stock market; would that be the time to strike; with whatever resources amassed from now until then?

I think I might just give this a go. No harm giving it a go when there is little to no opportunity costs at stake. Correct ?

• Do you think that the US economy is heading towards recession ?

• Do you think the above mentioned strategy is worth a try ?

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