Published November 30, 2018
Recently, the following chart has been making the rounds. It shows that a full 90% of all 70 asset classes tracked by Deutsche Bank are delivering NEGATIVE returns for 2018 (as of mid-November). (more…)
Despite the Selling, the Market’s Uptrend Remains Intact … for Now
Published November 23, 2018
A recent post from Ben Carlson seeks to put the furious selling of October/November (to date) in a broader context, noting that many of the stocks and sectors that are being unmercifully hammered by the bears were the ones who had enjoyed exceptional gains over the past couple of years. (more…)
When Markets Come Unglued, Technical Factors Become More Important
Published November 16, 2018
Stocks have brought smiles to the faces of technical analysts everywhere. Per the textbook, stocks rebounded right back to the underside of key technical reference points before selling commenced anew. That’s point number one for the technicians. (more…)
Stocks React to Election Results and a Split Congress
Published November 9, 2018
It was no surprise that stocks rallied this week once the midterm elections had passed. Just as in 2016, and before most elections, investors become cautious ahead of elections. They usually breathe a sigh of relief afterwards. Stocks have gone higher after EVERY midterm election over the past almost 70 years, on an annual basis. With this election producing a split in Congress, is that bullish or bearish for stocks? The following research provides some data on that question: (more…)
Was This Historic October Selloff the Beginning of a Bear Market?
Published November 2, 2018
October is one of the two best months of the year here in Austin, Texas (the other being April). “Best” being defined as a break from the sweltering heat that drags along from May through September. In April and October, skies are sunny, temperatures are moderate, and our city is a joy. However, this year, we have experienced unprecedented rainfall that has washed away much of our prized October. The result of all the rain has been a swollen, mud-filled river through our city that has overwhelmed our water treatment facilities causing us to spend a week boiling water if we wanted to use it. It’s been a dramatic unraveling of our normally blissful month.
The stock market has experienced its own October unraveling. After a period of immense calm, stock investors have been rocked by a crushing series of volatile trading days, most often leaving market indexes heavily in the red. The sharp selloff ranks among the top 10 most damaging 35-day periods in the past 65 years. (more…)
No, the Stock Market Does Not Predict Recessions
Published October 26, 2018
Below is a good post from Ben Carlson regarding the ability of the stock market to predict recessions. The data says the stock market is bad at such predictions, rising half or more of the time in a 3-6 month window ahead of the onset of a recession. So, if the stock market “looks ahead” by 6-9 months as we are often told it does, the market is no better than a coin flip in foreseeing recessions. It may not look ahead all that well is the point. (more…)
Explanations for the Market Drop
Published October 19, 2018
Our post last week noted that the October selloff in stocks likely had drivers other than the oft-noted rise in interest rates as some of the most interest rate-sensitive sectors, such as utilities, were holding up just fine. We also noted that the wave of geopolitical issues that seem to be ever-widening were unlikely to be a major cause of the selloff as investors were not pouring money into bonds, as they typically do during periods of angst. A recent note from Oppenheimer points to persistent and increasing weakness in non-U.S. economies as being the primary catalyst for the current stock market correction. (more…)
Markets Are Wrestling with a Return to Normalcy
Published October 12, 2018
The past few days have seen the stock market fall back hard with the S&P 500 moving from new highs to piercing its 200-day moving average in a shocking 5-day torrent of selling. (more…)
The Market’s Best Performing Sector Isn’t Tech
Published October 5, 2018
Since July, one sector has ruled all in the stock market. While the large-cap Dow Industrials, S&P 500, and Nasdaq all flirt with record highs, you might be surprised to find that neither technology nor consumer stocks, the long-time leaders of this market advance, are the current belles of the ball. That distinction goes to healthcare stocks. (more…)
Market Manias – Bitcoins, Marijuana, and the Internet of the 1990s
Published September 28, 2018
We are far down the road of this bull market cycle. How much further this road goes is anyone’s guess. Nevertheless, we are struck by the mania investing stories of last year and this, namely, cryptocurrencies (2017’s mania), and marijuana stocks (2018’s mania). These stories are very similar to the internet “dot.com” stories of the late 1990s, it appears to us. (more…)