What About November?

November capped a big jump for the Dow. For the S&P not so much. Treasury yields began a correction from their historic rise. Gold seems to have come alive after a pretty good year to begin with.

All good? You decide.

To help assess what's going on behind the headlines, here's our monthly summary for November:

-   Important Indicators (as of 11/30/23)

 

-   Advance-Decline Line: vs S&P – no higher high

-   Fed Funds Target Rate – 5.50: Below 10-year bearish (5.50 vs. 4.37) – no.

-   10-year minus 2-year TSY negative?:  (4.37 – 4.73 = -0.36) – Yes - Inverted

-   10-year minus 3-mo TSY negative?: No (4.37– 5.45 = -1.08) – Yes - Inverted

-   Russel 2000 Index (IWM): Much lower than S&P – no higher high - Divergence

-   DT Industrials/Transports: Transports lower than Industrials – no higher high – Divergence

-   S&P 500 (SPY) vs. Financial Select Sector SPDR Fund (XLF): Mirrors SPY – No Divergence.

-   S&P 500 (SPY) vs. S&P Equal Weight (RSP): Much lower than S&P – no higher high - Divergence

-   S&P 500 (SPY) vs. Value Line Geometric Index (VALUG): VALUG a broader index than S&P or Dow. Much lower than S&P – no higher high - Divergence

-   Hi-Yield Credit Spread – 3.80 DOWN from 4.50 - Spread between below-investment grade bonds and similar duration Treasuries: When high, indicates increasing defaults. Has been trending up.

-   Shiller PE/10 – 30.92 – UP from 28.67 – still historically high (even after the quick, steep fall in stock prices, it remained elevated). [This Index highest value as long-term indicator of initial level or withdrawals (% TAV) for Retirement Investments: Higher P/Es indicate lower withdrawal % and vice-versa. Less value as guide to stock allocations shorter-term.]

-   Gold Futures: In contango

We use these numbers and ratios to give us some idea of what's going on beneath the surface. They're not necessarily good near-term buy-sell signals. But they are pretty good at discerning long-term trends.

Note the various divergences between SPY and: IWM, RSP, VALUG. Note also the divergence between the Dow Industrials and the Transports.

Divergences are red flags. They tell us that all is not necessarily as good - or as bad - as it seems. In this case, they're telling us that the stock cheerleaders are grasping at straws.

Now, admittedly, these are pretty tough straws. They continue to hold up no matter how hard the tugging and grabbing. That may be all fine if you're a brilliant short-term trader who gets in and out at just the right time. For the rest of us pikers, we'll let the straws fall where they may and get on with our lives.

Not that investments drive all that's good in life, by any means. But even those of us who try to corral our incvestments into a circuscribed part of what we hope are good, vibrant, and holy lives still do try to be good stewards of what God has given to us. And so we follow what we believe are good data and analysis to try to preserve what we've been blessed with. The Indicators help us do that.

For all you traders, or perhaps you who tie your daily lives to the gyrations of markets, we extend our best wishes. 

With that, we note the holy season of Advent begins this Sunday. Sunday is also the beginning of the new Liturgical Year. Such are the more important facts and figures to which we pay more attention. 

Wishing you all a holy Advent season. Try to remain recollected and not get sucked into all the "holiday hoopla" that the secular world throws at you. It's just going to make Christmas a commercial and entertainment event. But we know it marks the Birth of Jesus Christ. 

If you can resist the holiday hoop-la, try to do the same with the market hoop-la too.