Posted November 01, 2023
By Matt Insley
Stocks Retreat, GOLD Regroups
“Naturally, doom and gloom predictions are flooding the airwaves as the market continues its fall slump,” says Paradigm’s market analyst Greg Guenthner.
“It’s spooky season — and slippery stocks are starting to scare the pants off investors.
“The absence of new highs, poor breadth and sluggish action is taking its toll on the bulls. It’s gotten so gloomy out there that World War 3 and Black Monday have been trending on social media.
“Investors are on the verge of panic, expecting cataclysmic events to rip through the markets, sparking a historic crash.
“But is the situation for stocks really that grim?” Greg wonders.
“While we’ve yet to witness a significant breakdown,” he says, “the averages remain mired in a choppy, sideways trend.
“Last week’s action was especially difficult. The S&P lost 2.5% to close at its lows on Friday, hitting levels we haven’t seen since late May.
“The summer melt up has melted down as the large-cap index has dropped more than 10% from its highs.
“As the market continues to lurch along, remember the rules that guide us in these conditions…
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Your Rundown for Wednesday, November 1, 2023...
A Retreat… And a Rally
“We’ll let price lead the way,” Greg emphasizes.
“Don’t get too caught up in the scary headlines. Price will tell us how this market will behave in the weeks and months ahead — the narratives won’t!
“Choppy action means fewer trades.
“Taking a step back from a choppy market will allow you to protect your capital, limit drawdowns due to failed breakouts and allow you to jump on any new opportunities when they emerge due to your large cash position.
“Cash is a trade!
“Breakeven is winning in this market.
“Passive investors are watching their losses grow as stocks continue to retreat from their summer highs,” says Greg.
“So-called ‘growth investors’ are down big as many of the prominent names in this group are down as much as 50% from their year-to-date highs. They have a long way to go before they will make those losses back.
“By limiting your drawdowns, you’ll be miles ahead of the herd when this market finally picks a direction,” Greg says. “If a trade’s not working, cut it loose. Small losses won’t kill you (but big ones just might).”
On the subject of gold’s October rally, Greg adds: “[This] could be a very big deal.”
Gold has “already broken-out priced in euros, the pound, yen, etc. — all-time highs,” he says.
“It's even more impressive that [gold’s] making this move in USD with the dollar index ripping. A breakout three-plus years in the making.
“Once it goes, [gold] won't look back,” says Greg. “Insert gaudy price target of your choice here.”
Market Rundown for Wednesday, Nov. 1, 2023
The S&P 500 is still chopping along: up 0.20% to 4,200.
Oil is up 2.30% to $82.90 for a barrel of WTI.
Gold is down to $1,981 per ounce, according to Kitco.
At the time of writing, Bitcoin is up 0.20% to $34,570.
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