The Economy Is Weakening & Stocks Will Have To Fall To Reflect That | Michael Lebowitz

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**Michael Lebowitz** (0:45)
I think the economy, though, is the worry, at least for the time being. And there are just signs that the economy is gently weakening. It's not collapsing by any stretch of the imagination, but we're just starting to see more and more data, whether it's consumer-oriented, business-oriented, that's weakening. And if we are going to a recession, it's going to be very hard for corporate earnings to try to live up to the pretty lofty targets.

**Adam Taggart** (1:25)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart, welcoming you here at the end of another week. For another Weekly Market Recap this week, featuring my good friend, the portfolio manager, Michael Lebowitz. Michael, how you doing?

**Michael Lebowitz** (1:39)
I'm doing great, Adam, how are you?

**Adam Taggart** (1:41)
I'm doing wonderful. It's July 3rd as we're recording this. I think this will launch on July 5th. So everybody watching, yourself included, Michael, I'm gonna wish you a happy 4th of July. I hope you have a great, I hope you had a great Independence Day if you're watching this on the day this video actually releases. But Michael, I hope you have a good one tomorrow.

**Michael Lebowitz** (2:01)
Thank you. It's nice that it falls on a Friday, as opposed to the middle of the week like normal.

**Adam Taggart** (2:07)
It is nice. And folks who are recording this on Thursday because the markets are not open on Friday. And I also want Michael to be able to enjoy his 4th of July without having to have any recording duties. Obviously, Lance Roberts is not here this week. He is traveling in the UK., I believe. I think he's actually hopefully going to be having a meal at the Clarkson Pub, maybe going to tour the Clarkson Farm, and going to come back with a whole bunch of war stories for us, I'm sure.

**Michael Lebowitz** (2:35)
Right. Right. You know what? He's actually been on vacation. I have not heard from him, which is a first for Lance being on vacation. So kudos to Lance.

**Adam Taggart** (2:44)
Really? Kudos to Lance. I might have to just call him then just to just not let him get off scot-free.
There you go. All right. Well, look, as usual, Lance leaves and interesting things happen. So we're talking just a moment about the surprise jobs report that just came out, Michael. But why don't we just start with the markets themselves? Can we take a look at the technicals of the market? Because it does seem that the bulls are now fully in charge, almost to the point, Michael, where is there a melt up that might be going in process here?

**Michael Lebowitz** (3:25)
Yes. Melt up is a good word. So it wasn't the most volatile week, but year-end or quarter-end, I apologize, created a little bit of volatility. What we saw was that some of those momentum stocks that were leading the way, the Palantir's of the world, the NVIDIAs, they got hit hard on July the 1st, after running up for the better part of the first quarter. And a lot of that just has to do with institutional investors wanting to sell, relieve some of their holdings once you get past quarter-end, so that at quarter-end, they could show their investors, look, I owned Palantir and NVIDIA, but they were de-risking on July 1st. That's typical at quarter-end and even more so at year-end. So part of the chore an investor had to do this week was try to ignore what happens on the last few days and the first couple of days of around the quarter-end. And the market's behaving more normal today, so hopefully the quarter-end impact is beyond us now. But what I have up is a graph of the S&P 500, and there's a few notable things on the graph. First of all, we're at all-time highs, and the market's up another 50 or so to close the week before the holiday. So again, another high, and it's been a very consistent pattern upward for the last two weeks. If you look up at the top, you see the moving average convergence diverged into the MACD. And that kind of consistent bullish trend has persisted ever since that those two crossed back into bullish territory. What's interesting, though, is that you can see they crossed for the first time in mid-May, potential bearer signal, but they never really, it never materialized into a relieving of the overboughtness. It just, the two moving average lines just kind of crisscrossed each other in a relatively unusual fashion. So we got back here and where the lines are diverging again, meaning that we have a bullish trend taking place. The bottom line is also the RSI. That's at a decently overbought level. So one issue we have with the recent rally is that it's occurring or it's starting from very overbought levels. So we want to temper at least for the next week or so, enthusiasm that because we're new highs, we're just going to go hitting new highs for the rest of the year. We're due for some sort of consolidation, maybe a rest bid, maybe a decline of some sort. Before we could get this going. Now, if you're looking for levels to potentially active support, the first level would just be the old high, which is roughly 61.40, which is that resistance line. So even that, even if we just go back down to that, that's 130 points, 2 percent or so, 2.5 percent. Then we can really start looking at the old support line and those moving averages. Now, the moving averages are confirming that we're back in a bullish trend. You can see the 50-day moving average is above the 100 and 200 again. It's sloping nicely upwards. You can see that the 200-day continues to slope upwards. It never really turned downwards. And the 100-day in blue is just starting to resume its upward track as well. So those three lines, starting with the 50, then the 100, then the 200, should provide resistance if we break back down into the upper 5,000s. So those are some levels to watch out for. On the upper side, it's more difficult because we're at all-time highs. So there are no prior prices that can act as resistance to this rally. That said, both the RSI and MACD are at pretty high levels and overbought. So I would expect at a minimum consolidation and possibly a few percent downside.