Weekly Update

Expectations for a new year

Published December 30, 2016

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Over the course of 2016 stock investors saw a dramatic shift in market leadership. As interest rates fell back in the first half of the year, so-called low volatility sectors led the market. These sectors tend to focus on higher dividends thus are beneficiaries of lower interest rate expectations. As markets entered the final quarter of the year and the Fed’s expected December interest rate hike became more of a certainty, leadership shifted toward sectors that are more cyclical along with those that benefit from a rising rate environment. This trend accelerated substantially after the election. (more…)

Weekly Update

The Turning Point

Published December 23, 2016


As technical chartwatcher-type folk, we review the year from a chart perspective. When doing so, we noted a major turning point in 2016 for the markets. That turning point occurred in mid-February. Take note of this headline from CNN-Money on February 11th as a reminder: “Oil crash taking stock down … again(more…)

Weekly Update

How to diversify

Published December 16, 2016


Diversification is a key tenet of the Trend Timing risk management discipline and should be part of every investor’s strategy. The simple definition of diversification is to include an assortment of investments in a portfolio in order to limit the exposure to any one of them going bad. There are however many types of diversification: (more…)

Weekly Update

Earnings turn up

Published December 9, 2016

 We have written a few times how the tremendous decline in energy earnings was pretty much the sole reason for the quarters-long negative streak in earnings for the S&P 500. Liz Ann Sonders from Charles Schwab wrote this week about the improving outlook for earnings and how that improvement has underpinned the recent stock rally. Here is what Mrs. Sonders had to say: (more…)

Weekly Update

Get it together Nasdaq!

Published December 2, 2016


 Stocks have surged after the election with investors enthused about a coming raft of tax cuts and increased government investment. The epicenter of this move has been domestic-focused stocks, particularly those of smaller companies. Companies with a more global footprint have been a mixed bag as concerns about a possibly more protectionist trade approach perhaps offsets the goodness of increased government cash infusions. To that end, our focus Nasdaq 100 index (QQQ) has substantially lagged the upward action. This lagging behavior might well portend coming troubles in the broader market as the post-election enthusiasm wears off. (more…)

Weekly Update

Post-election market rips higher

Published November 25, 2016


Many investors are astounded by the nearly vertical move higher in stocks since the election. Below are a couple of commentaries from high-profile money managers that shine a light on what is behind the sharp move higher in stocks. As we’ve pointed out the past couple of weeks, the move upward in stocks has been dominated by certain sectors – e.g. finance, industrial – while other sectors have suffered – e.g. anything income-oriented + bonds. (more…)

Weekly Update

Value stocks coming on strong

Published November 18, 2016


Continuing on from last week in describing the major shift in the markets post-election, we reprint below John Murphy’s article discussing some of those shifts. (more…)

Weekly Update

Emotional markets

Published November 11, 2016timingcube_cartoon11112016

Followers of markets this week got a heavy and concentrated dose of the unbridled emotion that can affect markets. Stocks jumped higher Monday and Tuesday as it appeared a Hillary Clinton victory was likely (after nine consecutive days of losses begun when FBI Director Comey announced a new email investigation). Mrs. Clinton has been the Wall Street favorite for some time as she is more of a known quantity to markets; whereas Mr. Trump’s stance toward markets is unclear and occasionally has come across as anti-trade, a concern in some companies and sectors. (more…)

Weekly Update

Market under pressure

Published November 4, 2016


Last week’s market summary noted that stock investors were looking for earnings to light a fire under the bulls and deliver stocks to new high ground, a spot the Nasdaq Composite index had visited for one day early in that week. Since that new high for the Nasdaq, it’s been nothing but badness for stocks with the S&P 500 index logging a rare eight straight down days. (more…)

Weekly Update

Market headwinds

Published October 28, 2016


While earnings have been generally better than expected so far in this earnings season, stocks have continued to struggle finding enough buyers to push higher. Indeed, small and midcap stocks have broken downward as investors pull back on taking risk. Of the companies that have reported through October 26, 67% have beaten analyst consensus estimates. Since 1999, the historical earnings “beat rate” is 62%.