A Week for Setting Records Last week we got a quick peek at what the much-talked-about market rotation might look like. Following a massive reversal of a broad-based rally in the Cyclicals that occurred a week ago Tuesday, the S&P 500 embarked on a slow march upward that culminated in that index posting a new record high this past Monday. That put an end to any further speculation about a failed bear market rally and marked its advance from the…
A Brief Glimpse of the Rotation Ahead This week we got a quick peek at what the much-talked-about market rotation might look like. Monday brought a significant divergence among the benchmark averages with the DOW up 1.3%, the S&P 500 up .28%, and the NASDAQ down .39%. That is a reversal of the trend that we’ve seen in the past couple of months as the NASDAQ roared to a new record bull market high while the other benchmarks languished within…
Stocks Surge Along with the Virus This week we saw the NASDAQ extend its lead in performance over the other major averages as it breached the 11000 level. That leaves it as the sole bull market among the major averages while the “market”, defined as the S&P 500, is closing in on its record high of February. So, why are the indexes advancing against bearish sentiment surrounding the virus? The construct of these indexes could distort the connection of the…
Consolidation of Growth Stocks Looming We see the recent consolidation of large-cap tech stocks as the beginning of the shift of investor capital from growth to select value sectors that we commented upon last week. The pendulum won’t swing from growth to value overnight. It will occur in fits and starts as rationality returns to valuations and news of the virus charts a course for the economy. Financial performance of the market leaders will be revealed in the current and…
The Imbalance of Growth vs. Value During this advance from the March lows, we’ve focused on the market’s disconnect from an underlying economy in recession. We’ve also noted the bifurcation between winners and losers among stocks as evidenced by the NASDAQ’s lone return to a bull market while the other indexes still tread below their February highs. That bifurcation was seemingly drawn along the line between stocks categorized as Growth or Value. The former being generally described as higher multiple/volatility…
“Talking” the Market Higher Seems to Be Working In a holiday-shortened week we’ve seen the stock market close out Q2 on a high note, leaving all the major averages with double-digit gains for the quarter. That momentum carried into Q3 with three consecutive advances for both the NASDAQ and S&P 500. Better than expected economic data and speculation regarding vaccine development fueled the advance despite news of the virus transmission spiking in a number of states. Today’s employment report indicates…
The Market Awakens to the Reality of Reopening For a second week, we’ve seen the major averages consolidate off their rally highs as they settle into a trading range. As usual, news of the virus continues to offset any economic data that’s received as positive in light of expectations. Predictably, the reopening of the economy through two phases has sparked a dramatic increase in cases and hospitalizations in a number of states. This has prompted some governors to pause or…
Tailwinds for the Market: Low Expectations and the Fed Last week, we saw anecdotal evidence of a second wave of the virus spread throw fear into the market to the tune of an almost 6% sell-off in the major averages. This week, the S&P 500 has clawed back a good portion of that decline on the wings of a well-received Retail Sales report and a better-than-expected Empire State Mfg. survey. Both exceeded analysts’ modest expectations formed in the aftermath of…
Is this a bear market rally or something we haven’t seen before? That’s the question posed by investment professionals as we survey the carnage emanating from the economy and attempt to reconcile that with the stellar stock market performance of the past six weeks. We’ve witnessed the infrequent bear market in 1987 that predicted a recession that never was. Never before have we seen a bull market coincide with the start of a recession. As enduring as Newton’s Law, the…
The Economy Surprises Within the context of bleak economic data and civil unrest, stocks continued their advance this week going into Friday’s employment report. The numbers were expected to be grim with estimates of unemployment at nearly 20%. Instead, we saw 2.5 million jobs ADDED to the rolls in May and the jobless rate drop to 13.3%. That proved to be the green light for traders to jump in and take the DOW up almost 1000 points (+3.5%) and the…
