Extraordinary rallies off bear market bottoms are typical. Bullish run-ups in March of 2003 as well as March of 2009 registered enviable unrealized gains of 35% and 65% respectively; each advance experienced little resistance for roughly 9-10 months. Powerful moves off minor corrections are less typical, if not downright suspicious. Investors in the S&P 500 SPDR [...] Continue Reading...
Is the American consumer genuinely spending? While the combination of rising home prices and higher 401k values may contribute to a temporary wealth effect, higher payroll taxes may begin to exact a toll. Consider the curious case of SPDR Retail (XRT). Its year-to-date 16.2% haul is better than most large and mid-cap benchmarks. Equally impressive, XRT [...] Continue Reading...
When you think about it, ultra-low interest rates can be credited with a wide variety of recent occurrences. Real estate became more accessible. Vehicles became more affordable. And higher-yielding stocks and bonds became unavoidable for those who required a return on their life’s savings; that is, CDs and treasuries were not able to provide retirees [...] Continue Reading...
For the first time in 2013, investors do not appear to be tripping over themselves to buy every fractional percentage dip. Here on 4/15, the media have blamed the accelerated selling on commodity price depreciation and a disappointing GDP reading (7.7%) out of China. So we’re supposed to believe that a manic Monday where the domestic [...] Continue Reading...
Flare-ups in the euro-zone refuse to disappear entirely. On the heels of a disastrous Italian election and a full-fledged banking crisis in Cyprus, a Portuguese court has ruled that some of the austerity requirements for bailout dollars are discriminatory. Prime Minister Coelho hopes to find a workaround, but alas… securing bailout money in the near [...] Continue Reading...
Over the course of the 4-year bull market, I’ve kept an eye on the percentage of S&P 100 stocks that reside above a long-term 200-day trendline. Market pressures always seemed to develop when the level approached 86%-90%. Similarly, when the 50-day moving average for the S&P 100 reached 85%, you could pretty much count on [...] Continue Reading...
Investors may be heartened to discover that the Cyprus bailout is back on track. I am not sure how that will prevent Europeans in Italy and Spain from slowly moving their money out of beleaguered banks, but that is an issue for another day. Right now, broad-based U.S. large cap stocks are trading at record levels [...] Continue Reading...
People are feeling better about spending money. Similarly, investors are feeling better about risking it. The problem is, whenever people begin to feel wealthy due to a faulty premise (i.e., the U.S. Federal Reserve can keep buying bonds to depress interest rates without longer-term implications), they may spend more than they have. Others may blindly [...] Continue Reading...
Non-cyclical stock sectors (e.g., consumer staples, health care, utilities, etc.) often do well when there are concerns about economic growth. Indeed, exchange-traded funds representing one or more components of the non-cyclical arena have been the key drivers in the broader U.S. market’s run toward all-time records. Nevertheless, it is still a bit surprising that the potential [...] Continue Reading...
What does it mean when we learn that consumer sentiment drops to the lowest level since 12/2011? For the bulls, it means that any setback in consumer “feelings” will be offset by the Federal Reserve’s easy money policy; that is, the Fed will not quit its bond-buying, interest rate lowering until exceptional employment prospects spur [...] Continue Reading...
