S&P 500

Weekly Update

And Again … the Stock Market Finds Buyers


Published September 3, 2021

The S&P 500 has spent ten straight months above its 50-day moving average, one of history’s longest stretches of calm. Ultra-low interest rates from an extremely cautious and accommodative Federal Reserve have supported risk-taking investors by keeping the cost of money near zero. Very strong corporate earnings have rewarded investors by expanding the ‘E’ in the P/E ratio, justifying the market’s run upward. (more…)

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High Valuations and Seasonal Trends Make September a Scary Month


Published August 27, 2021

We have written often in recent weeks about how extended the market seems to be. Some of this content has come from Schwab. Back in the late 1990s, Schwab notified clients more than once that the market’s valuation was excessive and to be careful. Similarly, they have been proactively warning this summer of higher-than-normal market valuations and a market ripe for some downside action. There are notable differences between now and the late 1990s. (more…)

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The Stock Market’s Winning Streak Leads to Calls for a Pullback


Published August 20, 2021

The following content from MarketWatch highlights the reason why we are model-driven investors. It is all too easy to get caught up in speculation about what markets “should do” and let that drive our investment decisions. We find it far more productive for our money to row with the market’s price trend, recognizing that market prices move up as well as down, and allowing ourselves the flexibility to pursue gains regardless of market price direction.

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Has Peak Earnings Growth Meant Peak Stock Market?


Published August 6, 2021

Below is an article from Schwab on the connection between earnings and the stock market.

“In what shaped up to be a very impressive first half of the year for both the economy and stock market, stellar earnings growth has been a key ingredient. Coming off stronger-than-expected S&P 500 earnings growth of 53% (year over year) in the first quarter, second-quarter earnings are currently anticipated to grow by 78%, the highest since 2009. That is well higher than the initial consensus estimate of 65%. (more…)

Weekly Update

Different Types of Market Corrections


Published July 23, 2021

 

We thought a recent article by David Keller on the various types of market corrections might be of interest. Here it is with some recast charts we provide to assist:

“As the S&P 500 and Nasdaq 100 indexes have pounded away at new all-time highs basically every month in 2021, investors are left to wonder when a correction may actually be coming. We were taught that markets do not just go straight up, but instead they move in a series of impulse moves and corrective reactions as the overall trend continues. But 2021 has very much been the exception to that rule of market trends! (more…)

Weekly Update

Behind the Headlines, The Stock Market Is Weakening


Published July 16, 2021

The stock market is in the midst of a correction, a pullback in price. With broad market indexes hitting new highs, this assertion sounds clearly wrong. However, look under the surface of those indexes and most stocks are going nowhere, with a sizeable chunk of them declining. (more…)

Weekly Update

The Stock Market Shudders as the Fed Starts to Shift Gears


Published June 18, 2021

This year’s stock market has been all about rotation with money moving into value stocks and out of growth stocks. The narrative has been that rising inflation would push up interest rates. The hike in rates in turn raises the denominator of the classic stock price valuation (e.g. earnings/interest rates) which devalues high-flying growth stocks. The beneficiaries of this narrative have been cyclical sectors like materials, industrials, and energy. This week that narrative took a beating. (more…)

Weekly Update

Markets Churn as Investors Look For What Comes Next


Published May 21, 2021

Taking a step back this week to consider the broad market and the substantial changes that have been going on under the surface.  At surface level, the broad market S&P 500 remains close to its all-time highs while our favored Nasdaq 100 index, heavy with tech and consumer stocks, has been choppy over the past four months.
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Weekly Update

Uncertainty in the Market


Published May 14, 2021

 

The stock market continues to hold on through intermittent bouts of selling. Corporate earnings have been record-setting in their growth from year-ago levels, severely depressed though they were. Despite outrageously good earnings for the top growth stocks in the Nasdaq, investors continue to shift money to cyclical value sectors like energy, finance, materials. The lackluster response to the hotshot earnings has led to some heavy down days in the market recently. (more…)

Uncategorized, Weekly Update

Market Reaches Technical Inflection Point


Published May 22, 2020

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The stock market has rallied hard off the March 23rd bottom, surprising almost everyone in the strength and lift of the move. This rally has brought the Nasdaq 100 (QQQ) back to positive on the year, a stunning development given the dire economic situation. That positive year-to-date print for the Nasdaq reflects the seeming fact that Covid-19 has served to accelerate trends which benefit these top companies of the digital economy – e.g. Amazon, Facebook, Google. That the Russell 2000 small-cap index remains down almost -20% year-to-date, while the equally-weighted version of the S&P 500 is down -16%, is perhaps a better stock market gauge of the overall economy’s troubles. (more…)