The old adage “sell in May and go away” seems to be working this year. In short order all three averages experienced a down draft over the past few days that amounted to about a 5% decline in total. Is there more to go on the downside?
At the Market
Volatility in the form of U.S. trade tariffs levied on China cut through investors’ complacency with a vengeance this week. It took less than three days to drop the markets by 3%. Is it over or do we have another 5% or so to endure?
Some people believe we are in a “melt-up.” It is where the simple weight of money pouring into the U.S. stock market continues to carry stocks ever higher. Whether that qualifies as an investment thesis, or simply a lame excuse to justify record highs, it matters little to the bulls. It is true that this past week, we actually witnessed a rare event—a two-day, 50-point drop in the S&P 500 Index—before stocks recovered. But good news on Friday morning (job gains in the economy came in at 236,000) cheered investors. It was largely a goldilocks report where wage gains (considered…
The first print of the nation’s Gross Domestic Product for the first quarter of the year came in at 3.2%, versus 2.5% expected. That was a big beat and justifies the market’s gains over the last three months. If you couple this with the quarter’s earnings results, which have been stronger than expected, you have the ingredients for a goldilocks economy and strong stock market. “If the numbers were so good,” asked a client, “then why didn’t the markets react more positively to the news? Well, one reason may be that the data provided a past view of the economy…
The stock market won’t quit. It has been on a tear since the day after Christmas. It feels like it wants to keep climbing. That would be a fairly simple feat at this point, since we are only a percent or so away from regaining those historical highs. What will happen once we get there.?
After a week of low volume consolidation, all three averages broke higher on Friday. The bulls are still in charge and seem determined to push stocks back to their all-time highs. A trigger could be this year’s first quarter earnings season, which is upon us, some of the multi-center banks reported today. They did not disappoint, beating estimates handily and expectations are that most of the big banks will also beat earnings estimates. That won’t be too difficult to do given that earnings estimates have been down-graded not once, but twice, over the last three months. Overall, the Street is…
As fearful as investors were back in December, the greedier they have become in April. Investor sentiment is climbing, interest rates are falling, and the Fed is on hold. All we need to push the markets even higher is a trade deal with China. It’s coming.
Friday marked the end of the quarter for stocks and investors worldwide celebrated by buying. It was a spectacular come back from last year’s fourth quarter. The question on your mind right now is will the run continue?
Sometimes too much good news can be interpreted badly. Take the U.S. central bank’s about face on monetary policy late last year. That was good news and investors responded by bidding the stock market up by 20%. But this week we may have received even better news, or did we?
What a difference one quarter can make in the stock market. Here we are in mid-March and stocks are back to almost where they were at the beginning of October. The trends have been supporting the bull’s case and investors seem happy to buy stocks.
Investors were greeted on Friday with two nasty surprises. Both occurred in February. Chinese exports dropped by 20.7%, while in the U.S., the nation added a dismal 20,000 jobs. As you might expect, the stock market did not take the news well.
February delivered good gains for the markets. All the main averages were up, continuing January’s climb toward the old highs. This week, momentum stalled a bit, indicating that investors need more good news to continue buying.
Investors remain cautiously optimistic that the wall of worry that has been plaguing us for months may now be crumbling. That’s no sure thing, but at least we did have some good news this week.
Profit-taking is a natural and expected part of the stock market. That’s why no one should be surprised that this week we are witnessing a period of consolidation. It is actually a good thing.
After two years of tightening monetary policy, the U.S. Federal Reserve Bank signaled this week that it was time to put their monetary tightening program on hold. The stock market soared in celebration.
The markets needed a break. Overbought, extended, and tired of buying, traders took a time out this week. It is a necessary part of the market equation. Two steps forward, one step back. Now that we have had six days of consolidation, expect more upside.