Connect with us


More FOMO In March?



Most investors hoped that January’s record gains would continue for the rest of the year but instead most are happy that February is over. On February 5th, I commented that the record call buying three days earlier was “probably a sign that the fear of missing out (FOMO) has gotten too high.” I thought “that the stock market may be ready for a setback’.

The Dow Jones Industrial Average, which had been leading the averages since October, was hit the hardest, down 4.2%. It was followed by a 2.6% decline in the S&P 500 while the Nasdaq Composite was down just 1.1%.

Before Thursday’s down gap open the S&P 500 was already down almost 0.5% for the week. The rebound from Thursday’s lows surprised me and many other analysts as the S&P 500 closed up 1.9% for the week. The Dow Jones Transportation Average was the best performer up 3.3% followed by a 2.7% gain in the Nasdaq 100 Index.

The SPDR Gold Shares (GLD GLD ) were up 2.5% a bit better than the 2.1% gain in the iShares Russell 2000. So far in 2023 both the Nasdaq 100 and the Dow Jones Transportation Average are up over 12% YTD. That is more than double the YTD gain for the S&P 500 and ten times the 0.7% YTD gain in the Dow Jones Industrials.


The market internals reversed last week, closing with 2082 advancing issues and 1167 declining issues. That was in contrast to the prior week when there were three times more declining issues than advancing ones. In last week’s review of the weekly NYSE Advance/Decline line, I commented that “strong NYSE A/D numbers are needed to indicate that the correction is over.”

The NYSE Composite, which is more representative of the common stock, dropped below the 20-week EMA over the past two weeks but then closed above it gaining 1.7%. The January high at 16,222 is now the key barrier on the upside with the weekly starc+ band at 16,721. The two-week low at 15,342 is now the support level to watch.

The NYSE All Advance/Decline line moved through its downtrend, line c, and its WMA in early January (point 1). This positive signal was reinforced by the move above the longer-term downtrend, line b, at point 2. The gap between the A/D line and its WMA four weeks ago was a sign it was extended on the upside. The turn higher this week is a sign that the pullback is over.

The early action Thursday did not indicate a turn higher as the averages traded lower on the open. The Spyder Trust (SPY PY SPY ) made a new correction low at $392.33 as it came close to the converging 100-day MA (black) and the 200-day (dashed green) before closing higher at $397.81.

The A/D numbers had been negative for most of Thursday but did close positive. SPY gapped higher on Friday and rallied strongly throughout the day to close above the 20-day EMA (red) and the monthly pivot at $402.74.

The S&P 500 A/D line had been below its EMA for the past nine days before turning positive on Friday. It is still below the resistance at line b. The NYSE Stocks Only A/D line had been stronger than the S&P and it closed above its downtrend, line c, signaling an end to the correction. The daily NYSE All A/D line has also completed its correction as it moved through the resistance at line d. It would now take a drop below the recent lows to turn these A/D lines negative.

By 1:15 PM Friday (see Tweet) it was quite evident that the daily A/D lines were going to turn positive as the NYSE All A/D numbers were almost 5-1 positive. This was a sign that it was time to add to long positions in stocks and ETFs. One of the ETFs I favored was the iShares MSCI EAFE Index (EFA EFA ) that has 796 holdings and a yield of 2.44%.

EFA closed up 2.7% last week and it appears that the correction from the January high at $72.44 is over. The 61.8% Fibonacci resistance at $71.72 was overcome on the prior rally which was a sign the major decline was over. The weekly starc+ band is at $74.65 with additional resistance in the $78-$80 area.

EFA was favored because of its relative performance RS analysis as the downtrend from 2021, line a, was overcome at the end of 2022. This indicated it was a new market leader. The volume increased last week consistent with the end of a correction. The OBV is holding above its WMA and support at line b.

Another market-leading ETF is the iShares Dow Jones US Home Construction (ITB ITB ) which moved above its weekly starc+ band five weeks ago that indicated it was ready for a pullback. The stock market bears, many of whom look at the markets from a fundamental standpoint, have little explanation for the strength of ITB. Many have proclaimed the death of the home building industry since last year but ITB completed a bottom early in the year by moving above the resistance at line a.

ITB was up 2.5% last week as the pullback has held so far well above its rising 20-week EMA at $64.15. The initial upside targets are in the $74 and then the $78-$80 area. A close above the new monthly pivot at $69.13 this week will further support the bullish case.

The weekly RS moved through resistance, line a. in early December indicating it was a market leader. It has held well above its rising WMA as prices have pulled back. The on-balance-volume (OBV) closed just below its WMA and needs a move the resistance at line c, to confirm a bottom.

The yield on the 10 -Year T-Note declined on Friday after coming close to the daily starc+ band on Thursday. This put some pressure on the US Dollar and helped boost the metals and crude oil. The MACDs have reached the downtrend from the October highs so the move higher in yields could be stalling. The MACD-His is still positive but has formed lower highs (see arrow) as it has diverged from prices.

The daily analysis of the E-mini S&P Futures also indicates that the decline from the February high at 4207.50 is over with Friday’s gain. The projected upside targets are at 4171.8 and then 4237.8. A move above the February high, without a test of the October lows, is likely to change the view of many bearish Wall Street strategists.

The monthly pivot in purple is at 4042 with the 20-day EMA at 4034 and would look for some consolation by mid-week. There is good support in the 4000 area. The StoConf, Jerry A’s modification of George Lane’s stochastics, has turned positive after dropping below the green zone and the lower regression channel.

If the averages close higher for the next several weeks and reach the resistance in the 4140 -4160 area we are likely to see more investors again develop a fear of missing out (FOMO) like they did early in February. I would suggest that you continue to favor stocks and ETFs that are leading the S&P 500 based on the relative performance analysis.


Bonds See 2023 Recession, Stocks Aren’t So Sure



The yield curve is one of the most robust recession predictors and has signaled a recession may be coming since mid 2022. In contrast, U.S. stocks as measured by the S&P 500 are up materially from the lows of last October and only just below year-to-date highs, seemingly rejecting recession fears. Yet, fixed income markets see the Fed potentially cutting rates by the summer, perhaps reacting to a U.S. recession.

The Evidence From The Bond Markets

The recessionary evidence, at least from fixed income markets, is mounting. The 10 yield Treasury yield has been below the 2 year yield consistently since last July. That is is called an inverted yield curve and has signaled a recession fairly reliably when compared to other leading indicators.

Building on that, fixed income markets see almost a nine in ten chance that the Federal Reserve cuts rates by September of this year. That’s something the Fed has repeatedly said they won’t do on their current forecasts. Yet, a recession could cause it to happen.

The Stock Market

In contrast, the stock market shows some optimism. The S&P 500 is up 7% year-to-date as the market has shrugged off fears of contagion from recent banking issues. In particular, tech stocks have rallied.

In contrast, more defensive sectors such as healthcare, utilities and consumer goods have lagged in 2023. This suggests that the stock market is taking more of a ‘risk on’ position and is perhaps less worried about the economy.


That said the stock market is a leading indicator of the business cycle, it may be that stocks see a recession, but are now looking past it to growth ahead and are factoring in the lower discount rates that a recession might bring as interest rates decline. Also, the U.S. stock market is relatively global, so the fate of the U.S. economy is a key factor in driving profits, but not the only one.

What’s Next?

Monitoring unemployment data will be key. Though the yield curve is a good long-term forecaster of recessions it is less precise in signaling when a recession starts. Unemployment rates can offer more accurate recession timing. Unemployment edged up in February, suggesting a recession may be near, but we’ve also seen monthly noise unemployment. Two similar monthly unemployment spikes during 2022 both proved false alarms.

However, if we see a sustained move up in unemployment from the low levels of 2022 that may be a relatively clear sign that a recession is here. Economist Claudia Sahm estimates that a sustained 0.5% increase in unemployment rate from 12-month lows is sufficient to trigger a recession. Unemployment rose 0.2% from January to February 2023, so maybe we’re on the way there. Of course, the jobs market performed better than expected in 2022 and it could do so again. Still, fixed income markets do suggest a 2023 recession is coming. Stock markets don’t necessarily share that view.

Continue Reading


Which States Have The Highest And Lowest Life Expectancies?



There’s a wide variance of life expectancies among the 50 states in the U.S., according to a recent report prepared by Assurance, an insurance technology platform that helps consumers with decisions related to insurance and financial well-being.

Figure 1 below shows the 10 states with the highest life expectancy, starting with Hawaii, the state with the highest life expectancy.

Figure 2 below shows the 10 states with the lowest life expectancy, starting with Mississippi, the state with the lowest life expectancy.

Assurance scoured life expectancy data prepared in January 2023 by the U.S. Centers for Disease Control and Prevention (CDC). With this data, Assurance created several easy-to-understand graphics that offer information about life expectancies.

Life expectancies are a basic measure of well-being

As measured by the CDC, life expectancies are a basic measurement of well-being in a broad population and not a prediction of how long an individual might live. The CDC measures the expected lifespan for a person born in the year of measurement. This measurement is calculated based on the assumption that the individual will live and die according to the rates of death that are prevalent in the measurement year for each age. There’s no assumed improvement or backsliding in the assumed mortality rates in future years for each age in the life expectancy calculation.


By contrast, an estimated lifespan for an individual would consider their current age, their gender, and some basic lifestyle information. It might also attempt to project future improvements or backsliding in mortality rates based on key factors.

Significant influences on life expectancy calculations

Leading causes of death in the U.S. are heart disease, cancer, and accidents in that order. These immediate causes are significantly influenced by factors in the population such as poverty rates, educational attainment, rates of obesity and smoking, access to healthcare, prevalence of violent crime, and the support people receive from federal, state, and local governments. All these factors can vary widely among different states, which can be a key reason why life expectancies vary by state.

When you think about it, all these factors also have the potential to influence a person’s quality of life. The measured life expectancy rate rolls up all these factors into one objective measurement of well-being that’s based on population data.

In addition to the factors listed above, mortality rates increased and life expectancies decreased in the past few years due to the Covid-19 pandemic. A recent article titled “Live Free And Die” summarized recent research results that show that life expectancies in most countries around the world rebounded after the Covid-19 pandemic but that they continued to decline in the United States. Many of the reasons cited in the article for the continued decline in U.S. life expectancies are the same or similar to the factors listed above.

NPR‘Live free and die?’ The sad state of U.S. life expectancy

Why should retirees care about the life expectancies reported here if these measures don’t predict your own lifespan? Life expectancy calculations indicate the general well-being of the entire population in your area. While the living conditions in your area can influence your own lifespan and quality of life, retirees should focus on their remaining life expectancy given their age. They should also consider how the factors listed above that influence life expectancies in the population might apply to them.

You can obtain customized estimates of your remaining life expectancy at the Actuaries Longevity Illustrator. Part of your planning for retirement is understanding how long you an an individual might live, instead of relying on generalized information about larger populations you see in the media.

Continue Reading


IRS Dirty Dozen Campaign Warns Taxpayers To Avoid Offer In Compromise ‘Mills’



Owing taxes can be stressful. Unfortunately, the actions of some companies can make it worse. As part of its “Dirty Dozen” campaign, the IRS has renewed a warning about so-called Offer in Compromise “mills” that often mislead taxpayers into believing they can settle a tax debt for pennies on the dollar—while the companies collective excessive fees.

Dirty Dozen

The “Dirty Dozen” is an annual list of common scams taxpayers may encounter. Many of these schemes peak during tax filing season as people prepare their returns or hire someone to help with their taxes. The schemes put taxpayers and tax professionals at risk of losing money, personal information, data, and more.

(You can read about other schemes on the list this year—including aggressive ERC grabs here, phishing/smishing scams here and charitable ploys here.)

Tax Debt Resolution Schemes

“Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said IRS Commissioner Danny Werfel.

“This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”


Offers In Compromise

Legitimate is a key word. Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But, as the IRS notes, these “mills” can aggressively promote Offers in Compromise—OIC—in misleading ways to people who don’t meet the qualifications, frequently costing taxpayers thousands of dollars.

An OIC allows you to resolve your tax obligations for less than the total amount you owe. You generally submit an OIC because you don’t believe you owe the tax, you can’t pay the tax, or
 exceptional circumstances exist.

Because of the nature of the OIC—and the dollars involved—the process can be time-consuming. It can also be confusing for taxpayers who may not have a complete grasp on their finances.

First, you must complete a detailed application, Form 656, Offer in Compromise. You must also submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, with supporting documentation (generally, bank and brokerage statements and proof of expenses).

You’ll also need to submit a non-refundable fee of $205 and payment made in good faith. The payment is typically 20% of the offer amount for a lump sum cash offer or the first month’s payment for those made over time. Generally, initial payments will not be returned but will be applied to your tax debt if your offer is not accepted. Payments and fees may be waived if the OIC is submitted based solely on the premise that you do not owe the tax or if your total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines.

The IRS will examine your application and decide whether to accept it based on many things, including the total amount due and the time remaining to collect under the statute of limitations. The IRS will also review your income—including future earnings and accounts receivables—and your reasonable expenses, as determined by their formula. The IRS will also consider the amount of equity you have in assets that you own—this would include real property, personal property (like automobiles), and bank accounts.


Before your offer can be considered, you must be compliant. That means you must have filed all your tax returns and paid off any liabilities not subject to the OIC. After you submit your offer, you must continue to timely file your tax returns, and pay all required tax, including estimated tax payments. If you don’t, the IRS will return your offer.

Additionally, you cannot currently be in an open bankruptcy proceeding, and you must resolve any open audit or outstanding innocent spouse claim issues before you submit an offer.


You can probably tell—it’s a lot to consider. You may want representation. A tax professional can help marshal you through the process and offer practical guidance, while communicating what fees could look like.

By contrast, according to the IRS, an OIC “mill” will usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person’s tax debt for cheap. Also telling: the fees tend to be significant in exchange for very little work.

Those mills also knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing taxpayers money and time. You can check your eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool.

“Pennies On A Dollar”

What about those promises that taxpayers can routinely settle for pennies on a dollar? Not true. Generally, the IRS will not accept an offer if they believe you can pay your tax debt in full through an installment agreement or equity in assets, including your home. That’s why the IRS tends to reject a majority of OICs that are submitted. The acceptance rate is less than 1 in 3, according to the 2021 Data Book.

The IRS will generally approve an OIC when the amount offered represents the best opportunity for the IRS to collect the debt. It’s true that there’s a formula that the IRS uses to figure out how much they think they can collect from you. But there is some wiggle room to account for special circumstances, including a loss of income or a medical condition. It’s worth noting those are the exceptions, not the rule.


While submitting an OIC may keep the IRS from calling you, it doesn’t stop all collections activities—don’t believe companies that suggest that submitting an OIC will make your tax debt disappear. Penalties and interest will continue to accrue on your outstanding tax liability. Additionally, the IRS may keep your tax refund, including interest, through the date the IRS accepts your OIC.

You may also be liened. In most cases, the IRS will file a Notice of Federal Tax Lien to protect their interests, and the lien will generally stay in place until your tax obligation is satisfied.

Be Skeptical

An OIC is a serious effort to resolve tax debt and shouldn’t be taken lightly. Be skeptical—if it sounds too good to be true, it likely is. If you’re considering an OIC, hire a competent tax professional who understands the rules and is willing to level with you about your chances of being successful—including other options. Don’t fall into a trap that can make your situation worse.

MORE FROM FORBESIRS Urges Those Hoping To Help To Beware Of Scammers Using Fake Charities

Continue Reading