Indexes lose early gains, net long positions in U.S. equity futures is near the lowest level since 2006

MARKETS TODAY Oct 20 (Vica Partners) – The S&P 500 down 0.82% as of 3.45 p.m. Eastern. The Dow Jones Industrial Average down 105 points, or 0.35%, to 30,318. The tech based Nasdaq down 0.67%.

Stocks opened higher this morning and have fallen throughout the session, the 10-year Treasury continues to move higher with a yield at 4.226% a 14 year high. U.S. Dollar Index (DXY) flat to $112.90. Oil prices maintain yesterday’s gains with Brent crude $92.32, -0.10%, and US West Texas Intermediate $85.71, +0.19%,

Market sentiment is negative, net long positions in U.S. equity futures is near the lowest level since 2006

The net long position in U.S. equity futures from those surveyed by RBC was about $25 billion at the start of this week. That’s the total amount of long positions minus shorts. It is down from just over $250 billion in August, and it is currently near the lowest it tends to hit since at least 2006.  In addition, our most current data indicates the average equity fund manager is holding 7.1% of their portfolios in cash, the highest percentage since February 2001

What happening today…

U.S. weekly jobless claims fall

The number of Americans filing new claims for unemployment benefits fell unexpectedly last week. Initial claims for state unemployment benefits fell to a seasonally adjusted 214,000 for the week ended Oct. 15, the Labor Department said on Thursday. The consensus analyst estimate was 230,000.

U.S. existing home sales drop off again in September as mortgage rates continue to rise

Sales of existing U.S. homes dropped off again for an eighth straight month in September.

Existing home sales fell 1.5% to a seasonally adjusted annual rate of 4.71 million units last month, the lowest sales level since September 2012. Economists had forecast sales would decrease to a rate of 4.70 million units.

The 30-year fixed mortgage rate averaged 6.94% in the latest week, the highest in 20 years, up from 6.92% in the prior week, according to data from mortgage finance agency Freddie Mac.

IMPORTANT TO READ as low interest rates will return

The Federal Reserve will be forced to cut interest rates in 2023 if a deep recession occurs as the cure for inflation is not just raising rates. As we see a significant policy change coming by late Spring of 2023 with Powell reversing direction… just look at 12 month declining lower commodity pricing and new reports on rising retail inventories.

Yearly commodity prices will rise “as there are production shortages” which include: iron, copper and crude oil. Upside will continue!

Solid strategy for these type of market days ….  

We suggest investing in companies that have solid balance sheets and offer dividends.

Best to continue to cost average buy value stocks and resist most all tech and growth stocks where companies have negative margins. Our Teams forecast a negative 5-7% valuation correction for speculative stocks. DON’T try to time market lows!

*** Watch for our emerging 90 day Sector and leading company watchlist’s

*** Look to Index ETF’s like SPY to outperform stocks and most managed funds

*** Energy is the Top Performing Sector in S&P 500 Year to Date and will regain strength shortly

*** Banks will profit from higher interest rates on new loans and other products

Journal

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