12:00 TUESDAY – Stock Market Report #136 – 10/19/21
by Robert Holman | The Defensive Advisor | www.defensiveadvisor.com
INSIDE: Current market rating, the economy, and a free offer.
MARKET RATING … Staying at 7 (where 0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish) – although I was more cautious about the near-term as risks increased - I still remain optimistic longer-term.
We need to make a disappointing, but necessary, mental adjustment … to anticipating lower rates of return in the period ahead. (P.S. This is a mental discipline that helps us not make mistakes, no matter the outcome.)
Beginning Wednesday of last week, the market entered a rally mode. Staying at 7 on our market rating paid off for us, even when things appeared to be in doubt. The two leading groups/sectors currently are certain groups within Financials and Technology, and some groups within Energy are just a little bit behind the lead two.
ECONOMY … THE FED NEEDS TO GET ON WITH IT and stop injecting money into the system. The risk is that if they don’t act soon, they will have to make BIG adjustments rather than GRADUAL ones. Such big adjustments would likely be very detrimental to the markets.
Responding to lower-than-anticipated jobs growth, GNP growth forecasts are being cut back (again) for the 4th quarter. That usually means stock prices are a little ahead of themselves, but just a bit - that’s the current environment. The future economic environment (2022 and beyond) looks very good at this juncture.
EARNINGS … 3rd Qtr. Earnings, and/or forecasts for the 4th quarter so far, have been better than expected, so we will probably head up for a while. I’m still being cautious and conservative with our portfolio holdings.
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