Hey Folks, for sure this is the absolutely most hated Bull Market I have seen…and as long time traders fully understand; –it can go on for a lot longer than you can remain short! I for one have encouraged all our members to stay invested and long, in fact from early April we’ve been playing upside momentum…now what am I expecting over the next month or so…you can catch my free update below in his week’s Market Round Up…
Weekly Sound-Bites:
• With the S&P rally up 50% from the March lows this week’s close saw the index up 4.40% YTD… If the market officially eclipses this past February’s high, it will be the second-fastest bear-market recovery in the last half century, trailing only the rapid rebound in 1982…This reflects the unique economic shutdown and reopening aspects of this downturn, which produced the fastest-ever bear-market drop from a market peak, as well as what we expect to be an abnormally short official recession…
• And looking at the last six bull-market recoveries over the past 50 years, the average return in the first year was 44%. This did not come easily, however, as the first year experienced several 5% pullbacks on the trek higher and even some 10%-plus corrections1. Most recently, the recovery from 2009 had three 5% pullbacks in the first year and a 16% correction in the summer of 2010 (slightly after the initial one-year period). These weren’t harbingers of a dying bull, but instead highlight the fact that we should expect periodic setbacks even in strong markets…it has been about 100 days since our Mar 23rd lows and in the past 17 of 18 occurrences markets have finished the following 12 months higher..
• While the market’s 50% run off the lows has been the headliner, leadership from the tech sector is also getting plenty of fanfare…the NASDAQ is well into all-time-high territory, and the five mega-cap tech names – Apple, Microsoft, Amazon, Facebook, and Google – are up an average of 68% since March 23 and now represent over 24% of the entire S&P market cap…and we’re also seeing small-cap equities, which are more sensitive to domestic economic trends, gaining some steam, while international, notably emerging-market, equities have improved more recently, reflecting some early but encouraging signs in global markets…
• The latest inflation reading last week showed core inflation perked up from the pandemic lows. Consumer prices rose 1.6% year-over-year, up from 1.2% in the prior few months. One read on this is somewhat encouraging in that a pickup in inflation reflects a return of household demand…yet at the same time, we need to keep a close eye on the trend in consumer prices because it plays a key role in future Fed actions. Inflation is still running well below trend and below the Fed’s target level, so I would expect it remain so for a while longer…on the other hand we need to watch to see if supply-chain disruptions from the pandemic downturn create a more lasting mismatch in supply and demand that could persistently lift inflation, which would have implications for the Fed’s ability to keep current monetary-policy stimulus in place.
• On the US Stimulus front I think current Congressional negotiations around another round of household/business relief represents an acute short-term risk to the economy, and thus market volatility….we’ve seen negotiations stall; and while I believe some form of compromise will be reached to provide additional financial aid, the longer this drags out, the greater the potential negative impact to the economy, given the lapse in supplemental income and business funding.
• Stocks split for a variety of reasons but allowing great investor access is a primary goal…we have two major stock splits coming up on Aug 31st; Apple will do a 4 for 1 split and TSLA will do a 5 for 1 split…both stocks rapidly appreciated almost 20% each upon the share split announcement…currently we see the average share price of an S&P company is about $150; –just 5 years ago it stood around $82 per share so as stocks appreciate splits makes sense…currently there are about 20 stocks that are quoted over $400 per share so we can possibly expect more splits to occur on the back of these…
Enjoy This Weekly Round-up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
