Conway Jarvis

CJ Update – May 20, 2022

The Bear Market Box Has Been Checked Traders and investors took a breather Monday after last week’s market tumble to a new post-pandemic low. Volume was light, the indexes mixed, and generally flat. Tuesday’s rally was erased the following day with frenzied selling and the year’s biggest one-day decline of the S&P 500. The breadth of that dive points to forced selling in the stock market. That’s where borrowers on margin and pledged equity lines of credit are required to…

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CJ Update – May 13, 2022

Inflation Data Offers a Hint of Trend Change Those expecting any relief in May from last month’s market decline have, so far, been disappointed. With the exception of one notable rally prior to today’s, the indexes persisted in their downward march to Thursday’s post-pandemic lows. Yesterday’s close left the NASDAQ off 31% from its November record high. That’s well beyond the bear market threshold of 20% that the S&P 500 is flirting with at -19%. The DOW remains the leading…

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CJ Update – May 6, 2022

Traders Take the Market for a Spin It was a busy week, especially for traders who can’t resist betting on news of the moment. That news included the FOMC announcement, on Wednesday, of a hike of the Fed Funds rate by 50bp. At the press conference that followed, Chairman Powell clarified the Board’s perspective and laid out its strategy for the coming months. In doing so, he cautioned that the Fed, with its tools, couldn’t craft a remedy for what…

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CJ Update – April 29, 2022

Inflation Fight Weighs on the Economy and the Markets In Q1 of this year, we witnessed the movement of capital among sectors within the market as traders traded and investors rebalanced portfolios. The predicted result was a contraction of P/E multiples among some high-profile NASDAQ stocks and superior price performance from a number of value/income issues within the DOW and S&P 500. Last week, the P/E compression of the NASDAQ widened to include most, and on some days all, sectors…

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Event Risk Adds to Inflation’s Weight on the Global Economy

In our December Investment Outlook we addressed the need for investors to adapt their finances to challenges we saw arising for the economy and its markets in 2022. We measured the known risks. In our opinion, none were judged to be more than just “Moderate”, likely to do nothing more than slow the current global expansion. All were considered to be cyclical, solvable, and likely to be resolved over time. Today, we find the markets mired in the extreme uncertainty…

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CJ Update – March 4, 2022

Event Risk Overtakes Cyclical Risk Investor sentiment took a hit this week as the Russian incursion into the eastern regions of the Ukraine became a full-scale invasion. The capital, Kyiv, came under siege along with several other major cities in the country’s interior as a miles-long Russian convoy snaked its way westward. What was thought to be a brief, localized outbreak of hostilities as a prelude to a negotiated settlement regarding the separatist controlled states was in actuality a planned…

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CJ Update – February 25, 2022

Geopolitical Tensions Grab the Headlines Inflation and the Fed retreated from the headlines as all eyes focused on Russia’s militaryincursion into the Ukraine Thursday morning. At first glance, that aggression presents thepotential to upset political and economic stability on a global scale. After taking acloser look, that appears unlikely. The stock market embraced the worst-case scenarioearly in Thursday’s trading session as we saw the DOW join the NASDAQ and S&P 500 incorrection territory as they posted their year-to-date lows in…

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CJ Update – February 11, 2022

Inflation Headlines Weigh on Stock Prices As you might expect, the Fed’s recent announcement generated an abundance of speculative headlines andopinions from market watchers that served as a catalyst for the recent drawdown in stock prices. Bydrawdown we mean a not-so-surprising correction for the NASDAQ and the S&P 500, down 17% and 12%at their respective lows. At the same time, we saw the small-cap Russell 2000 slide into bear marketterritory, down 21% at its recent low. The DOW was resilient,…

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CJ Update – January 28, 2022

This Week: A Preview of Things to Come Since our most recent Update, that slight bump in volatility we saw earlier this month developed into a spike as measured by the VIX index. No doubt, you noticed. This week was all about the Fed and their scheduled meeting. It had some talking heads in the media giddy with excitement as they raised prior estimates of 2 to 4 rate hikes this year up to the 5 to 7 range. Apparently,…

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CJ Update – January 14, 2022

The Market Responds to the Shift in Monetary Policy These first two weeks of the year in the stock market have, so far, gone according to script as the Fed begins to remove the punch bowl. We’re seeing a slight bump in volatility as market participants shift their focus, and capital, from high-priced, large-cap Growth (mostly Tech) issues to the opportunistically-priced Cyclicals that typically perform well in a late-cycle expansion. Diversified investors with a long-term view need only make minor…

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