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The Weekly Update 4/19/2024

| April 19, 2024

The Weekly Update 4/19/2024


The valuations of Corporate America as measured by the S&P 500 are off to a very nice start in 2024. Since the current up trend started in November of 2023, last week (4/8/24-4/12/24) was only the 6th down week in 5 months.

In the chart below note the Fear vs. Greed Index dropped from 74 [Greed] down to 39 in 30 days.


Perhaps more important is that bottom right box representing one year ago at 65!  In the chart below the last year of Fear and Greed emotions is graphed.  It is hard to believe the investing community is near the same fear levels of November 2023, which was right before valuations turned up.  Check it out.

The chart below is from Bespoke Research.  This chart tracks over bought versus over sold, i.e., more people have engaged in fear selling to cause the valuations to be generally “over sold”! 

Make special note that last Friday’s, 4/12/2024, post was almost as oversold as the October lows of 2023.  That was the last time investors hated stock investments as much as they do today.

 But, the key is this chart went from over bought to over sold in about 30 days.  This, despondent type of selling tends to happen just before a turn to positive, like those before it, as you look back at the entries to the left.

So, we are back at very high investor fear levels and the big banks just kicked off 1Q 2024 earnings season with absolute “blow out” to the upside and “better than expected” revenue and earnings per share (EPS).

Those two, high fear levels and great earnings per share, have not historically presented together before a bear market, i.e., a -20% or more reduction in valuation.  We are due for a -10%, maybe -15% correction, but pray for it!

I believe the current S&P 500 level of 5,060 likely sees 7,000 before it sees 4,000.  Meaning up 40% before down 20%.  I did not say before 11/5/2024, but even that could be a positive catalyst.

I’m interested in your thoughts, comments, and observations.  Feel welcome to call, email, or stop by the office and say Hi.

Respectfully,

James O. Lunney, CFP®

CERTIFIED FINANCIAL PLANNER™ Professional  

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Stock investing includes risks, including fluctuating prices and loss of principal.show less