Broker Check

The Weekly Update for 7/21/2023

| July 21, 2023

Note to self, about the most positive (bullish) thing a market can do is go up!  There are many guidelines used as reference points in the asset management industry.  One is that markets tend to “officially” enter a negative (bear) market at a point of -20% below the last high.  Sometimes after the -20% pullback they drop everywhere from more to much more.

Another guideline is that once the market value stops going down, stabilizes and then begins to go up, it turns positive (bullish) at +20% off the last low.  For this example, Corporate America, as measured by the S&P 500, would enter a new bull market at 4,292, or +20%, off the last low.

That happened on June 8, 2023, with the S&P 500 closing at 4,293.93.  Just a fraction over, but over, the 20% guideline.  In addition, on June 30, 2023, the S&P 500 finished at 4,396.44.  Based on these historically correct guidelines, we are in a Bull Market and Sign #2 turns positive a year after the spiral down.

Are Mr. and Mrs. 401(k) still petrified to invest in Corporate America?  Yes!  Here is the money flow out of mutual funds as reported by Refinitiv Lipper on 6/28/2023. 


January -$4.21 billion

February -$14.6 billion

March -$23.435 billion

April -$31.32 billion

May -$23.01 billion

June -$7.70 billion

As we discuss here from time to time, there are two sides to every transaction.  So, if Mr. and Mrs. 401(k) are negative who is so darn positive on the other side of the trade?  Per Yardini & Associates Research there was $1.197 trillion in corporate stock buybacks in 2022.  In 2023 Corporate America is on track to buy back slightly more than $1.197 trillion at the Q12023 buy back pace.

Corporate America is the other side of many of the Mr. and Mrs. 401(K) sells.  Corporate America has hundreds of thousands of CPA’s, MBA’s and attorneys crunching the valuation numbers.  History has proven they are very astute on when to buy and when to sell.  To me, it makes no sense to be on the sell side based on all we know.

I closed out the June 2023 Sign #2 update suggesting: 

“This is a trifecta that should push Sign #2 to positive “soon”!

  • S&P 500 up 20% off last low in valuation
  • Money flowing out appears to be exhausted
  • and Mrs. 401(k) remain scared

Perfect set up for the upward trend to continue.”

We are there!

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


James O. Lunney, CFP®


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.