Broker Check

August 2023 Monthly Outlook - Return to the Scene of the Crime?

August 02, 2023

July saw a continuation of the solid uptrend we have seen in the stock market since March. 

Inflation continues to cool, albeit still too high.  Interest rates have stabilized around 4% on 10 year US Treasury. 

The economy remains resilient in spite of inflation and interest rates.  This is a bit out of character. Below is a chart of the Leading Economic Indicators. Since 2000, whenever the Year-over-Year % change in the Leading Economic Indicators (LEI – blue line below), drops below Gross Domestic Product (GDP – grey line below), the economy falls into recession soon after (see pink shaded areas).  It happened in 2001, 2008-2009 and 2020.

This cycle is different.  The YoY % change in LEI has been below GDP for several months and yet the economy chugs along.  Also notice that both the blue line and grey lines have started to turn up.

The annual growth rate of the LEI remained negative, signaling continued slowing in economic activity 


One could call that a rosy picture.  And it very well might continue to be rosy. 

However, the stock market has “returned to the scene of the crime”, in that it has recovered almost all of the decline in 2022 but has now reached the level where it first broke down back in January 2022.  The charts below show how both the S&P500 (broad market) and the Nasdaq 100 (mostly high growth tech companies) had strong runs from April 2021 through the end of the year, pushing through previous resistance levels (grey bars) only to fail and rollover to start a big decline.  Those Oops! circles are what is know as a false breakout. 

Stocks are now back at that previous resistance level (4,500 – 4,600 on S&P 500 and 380 on Nasdaq 100).  The big question now is can stocks push through that resistance level, as they did back at the end of 2021, but hold those levels, as they failed to do in early 2022.

I am cautiously optimistic that stocks can answer that question affirmatively.  None the less, we will continue to manage your investments with an eye towards risk management.


August 2023 Calendar of Events   (comments and suggestions always welcome)

                August is National Immunization Awareness Month – We’ve had Covid for over 2 years and now we have Monkeypox to deal with!


August  8th        My 65th birthday!   I just signed up for Medicare and my AARP supplement

August 17th     National Non-Profit Day – consider helping out financially or by volunteering for a worthy non-profit in your area

August 21st      National Senior Citizens Day –  I guess I can now officially celebrate this day           

August 26th      Women’s Equality Day – as the son of a single mom and the father of 3 wonderful daughters and 2 amazing granddaughters, I support improving quality

                              for women in all areas.



Please stay safe and well.


Sources: All Star Charts, Conference Board



Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

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