Author: fdacic

Weekly Update

Inflation Is Rolling Over but So Too Are Corporate Earnings(?).


Published September 30, 2022

 

Blaine Rollins outlines the key questions facing investors these days. Here are some excerpts from his recent commentary:

“You can see the light at the end, but how much risk will you take to run down to the other end? Big returns await if you can only make it to the other side. But there is always the possibility that you make it part way and the train called ‘recession’ interrupts your path. (more…)

Weekly Update

Up and Down – The Waves of a Bear Market


Published September 23, 2022

 

There are thousands of ways to invest. We prefer to remove the emotional component and use mechanical models to drive our investing. Some others like to rely on seasonal cycle analysis. One of those cycles is the four-year presidential election cycle shown below. The second year of the presidential cycle tends to be the worst of the four years. The return historically has been flat through the first nine months of the second year. This year, we are well below that flat historical trend. But the presidential election cycle suggests we are nearing the best performance of the four years. The period from the midterm election to the following May tends to offer outstanding performance. That would be a substantial change in market tone from where we are in today’s market where caution and negative sentiment rule. (more…)

Weekly Update

Interest Rates and Economic Uncertainty Keep a Lid on the Market


Published September 16, 2022

 

Investors have their hands full these days trying to parse the conflicting economic reports. The labor market tells us that unemployment is at record low levels. Wages are rising for the first time in a very long time. Yet, fear is growing that the economy may be softening, while inflation remains higher than investors would like (fueled by those same rising wages). This week was a microcosm of the pitched battle between bulls and bears.

We will look at the market’s largest and perhaps most influential stock, Apple. (more…)

Weekly Update

Stocks Stuck in a Holding Pattern


Published September 9, 2022

As stocks continue wrestling with many competing narratives, here is Delta’s summary of where things stand.

“The re-re-re-adjustment of interest rate expectations higher following Fed Chairman Powell’s Jackson Hole speech two weeks ago triggered a significant selloff in stocks. Then the news deteriorated further. (more…)

Weekly Update

Two Sector Charts Give Us Overall Market Clues


Published September 2, 2022

 

Since Fed Chair Powell’s comments a week ago markets have been off-kilter. The notion of a Fed shift to lowering interest rates in the first half of next year has been squashed, replaced by expectations that rates will remain flat at an elevated level for most of 2023. The bearish narrative is that come October corporate earnings reports will deal further evidence of a notable slowdown in the U.S. economy. Slowing economic growth combined with stubborn interest rate policy makes for an unhappy stock market. The bullish case points to very solid employment numbers and generally good consumer financial health with expectations that any recession will be brief and shallow. (more…)

Weekly Update

The Market Sans Energy Is Not So Pretty


Published August 26, 2022

 

With summer winding down, we await the post-Labor Day return of a fuller market trading pattern to provide better clues of investor thinking. In the meantime, the summary below from Delta offers a good overview of the current economic data.

(more…)

Weekly Update

Bulls and Bears in a Massive Tussle


Published August 19, 2022

 

It has been quite a long time since we have seen such disparity in the narratives flowing down Wall Street. How long and hard the Fed will tighten rates is one source of contention. But it’s not the biggest. That would belong to where corporate earnings are headed, which is sort of a Street barometer for whether or not the economy falls into a recession (how deep that recession is a third dimension discussion floating around also). (more…)

Weekly Update

Key Economic Indicators to Watch


Published August 12, 2022

 

The article below from Zacks provides a good overview of the key economic indicators to look for as we move into the second half of the year.

“The Federal Reserve is actively trying to curb demand in the economy by raising rates, and all the talk is about whether they can usher a ‘soft-landing’ without triggering a deep recession. So, the Fed will be a key factor to watch in the second half of the year. But I also have three other economic fundamentals investors should put on their watchlists, as they could be key in determining the path of the economy and markets over the next year. (more…)

Weekly Update

Market Recovers to Resistance


Published August 5, 2022

 

 

The stock market is at a crossroads having recovered the entirety of its June plunge. Prior to that plunge, stocks ran in place for several days as the bulls and bears fought mightily. That standoff was won by the bears, and the plunge ensued. The counter-rally, once it got going, has been almost as swift. (more…)

Weekly Update

Bulls Find Some Traction


Published July 29, 2022

 

In a bull market, investors buy the rumor and sell the news, with the selling being typically light. In a bear market like we are in now, this week showed us it is the opposite. Investors fear the news, sell stocks down on the fear, buying them back when the news, though bad, is not quite as terrible as it could be. So it was with the Federal Reserve announcement this week. (more…)