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Selling Resumed During the Shortened Holiday Week: Market Commentary from Cabana’s CEO – September 8, 2023 

1 year ago

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This shortened holiday week, and the beginning of September has seen a resumption of selling in both stocks and bonds as yields moved up near the August highs. For those tracking the 10-Year Treasury, the level is 4.30%. This has resulted in the major stock indices all falling back below their 50-day moving averages and resuming what can be described as a short-term technical downtrend. The S&P 500 found support in August at the 4350 level, and I would expect it to be tested again absent a quick bounce over the next few days. From there, we have support at 4200 and 4100. In my view, it would take a close below the 4100 level for the hopes of an emerging new bull market to be erased.  

I think it is really all about interest rates at this point. If the Fed pauses and indicates a plan to stay at current levels, we have a good chance of ending the year higher. If they remain hawkish in the face of deteriorating economic growth, the probability of a significant price reset for stocks rises. The next few weeks are historically volatile, and I expect it to be the same this year. Market breadth has again deteriorated, and small caps are lagging large caps by a wide margin. The equal weight S&P 500 and Dow Jones are underperforming the market cap weighted S&P 500 and Nasdaq. These are additional reasons to be cautious.  

At Cabana, we remain in our Cautiously Bullish Scene and are allocated to short duration Treasuries in our Safety Valve positions.  

Disclaimers

January 17, 2024

This material is prepared by Cabana LLC, dba Cabana Asset Management and/or its affiliates (together “Cabana”) for informational purposes only and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. This material may only be distributed in its original format and may not be altered or reproduced without the prior written consent of Cabana. The opinions expressed reflect the judgement of the author, are as of the date of its publication and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and nonproprietary sources deemed by Cabana to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Cabana, its officers, employees or agents.  

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All indices and categories are unmanaged and an individual cannot invest directly in an index or category. Index returns do not include fees or expenses. Benchmark indices will likely materially differ from Cabana’s portfolio strategies. Detailed information as to how the returns are calculated can be obtained online from the following link: https://thecabanagroup.com/disclaimers/performance-reporting-methodology/. 

Morningstar’s Moderate Target Risk index  follows a moderate equity risk preference and is based on well-established asset allocation methodology from Ibbotson Associates, a Morningstar company.  

Morningstar’s Tactical Allocation category includes portfolios that seek to provide capital appreciation and income by actively shifting allocations across investments. These portfolios have material shifts across equity regions, and bond sectors on a frequent basis. 

The S&P 500 Index is a market-capitalization weighted stock market index of 500 widely held large-cap stocks often used as a proxy for the U.S. stock market.  

The Russell 2000 and 3000 indices are market-capitalization weighted stock market indices that include, respectively, 2000 and 3000 of the most widely-held stocks and are often used as proxies for the U.S. stock market. 

The Nasdaq Composite Index is a market-weight capitalization index that covers more than 3,000 stocks listed on the Nasdaq Stock Market. What is the Nasdaq Composite, and What Companies are in It? | Nasdaq