Jul 022016
 

Market Analysis

Equities recorded their strongest weekly gains of the year following last week’s Brexit debacle. Markets were spurred higher by a vow to further ease monetary policy by the Bank of England during the summer. In the wake of those comments, markets have priced in an 85% chance of a rate cut in England by August. This all puts further pressure on central banks in the United States to keep interest rates low indefinitely. It appears that the zero-percent interest rate policy (ZIRP) is now the “new normal”. The S&P opened Monday at 2031.45 and closed on Friday at 2102.95, up 71.5 points, or 3.52%.

Chart_070216_SPX

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Jun 182016
 

Market Analysis

Stocks fell in volatile trading as investor sentiment continued to weaken ahead of next week’s “Brexit” vote. A clear swing in opinion polls in favor of the Leave camp put markets on edge this week. Investors also focused on commentary from central banks around the globe, which wasn’t surprising, considering the Federal Reserve, Bank of Japan, Bank of England, and Swiss National Bank all held their policy meetings. All four stood pat, keeping their key interest rates unchanged. However, all four cited growth concerns that fueled a flight to safety and a somewhat surprising aversion to stocks. Surprising, only because up until now, dovish commentary from the Federal Reserve has elicited strong rallies in recent years. The S&P surrendered nearly 1% on the week, opening Monday at 2091.75 and closing on Friday at 2071.22, down 20.53 points.

Chart_061816_SPX

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May 212016
 

Market Conditions

The S&P 500 barely ended the week higher, underscoring how the prospect of higher interest rates has unsettled investors. Federal Reserve officials and upbeat economic data in recent days have raised the possibility of a rate increase as soon as June. Last Friday, the probability of a rate hike at the June meeting was just eight percent, which increased to a thirty percent probability by the end of this week. The fed funds futures market is now pricing in a fifty-five percent likelihood of a rate hike in July, as well. Zero-percent interest rates have persisted for 90 months helping to propel the stock market higher. However, corporate earnings reports this quarter have been dismal. Companies in the S&P 500 are on track to report a fourth consecutive quarter of declines from the previous year. This coupled with potentially higher interest rates is leading investors to question what will continue to drive stocks higher.

The S&P 500 opened Monday at 2046.53 and closed on Friday at 2052.32, up 5.79 or 0.28% for the week.

Chart_052016_SPX

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Apr 232016
 

Market Conditions

The S&P 500 closed above 2100 on Tuesday and Wednesday of this week – the first time since December 1, 2015. However, there was not enough momentum to push the index to an all-time high. Global equities were propelled higher this week by energy and commodity-sensitive companies.

Investors continued to receive first-quarter earnings this week and the results were mixed relative to lowered expectations. Disappointing results from Alphabet (GOOG) and Microsoft (MSFT) kept the Nasdaq behind the S&P 500 while economically-sensitive rail carriers like Union Pacific (UNP) and Norfolk Southern (NSC) exceeded market expectations.

The S&P 500 opened Monday at 2078.83 and closed on Friday at 2091.58, up 12.75 or 0.61%.

Chart_042216_SPX

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Jan 302016
 

Faithful blog readers may be wondering why I posted so little this month. Many readers may know that I am also a commercial pilot. I recently was offered the opportunity to assist our local community college in establishing an FAA-approved Part 141 flight school. This has been a monumental task and has commanded virtually all of my free time. As a result, I have had little time to research trades and even less time to write about what trades I have made. I have managed to keep the Portfolio and Trade Results pages updated in nearly real-time. I apologize to my readers for the inability to post more actively. Once things settle down a bit, I hope to get back to weekly posts.

Market Conditions

The market certainly started off 2016 with a blow, but appears to be stabilizing somewhat. Even though we have seen wide swings in the S&P 500, this week did end on a huge positive note with the SPX up 46.88 points on Friday. Market activity this week was driven both by earnings and the central banks. The Federal Reserve released its January statement on Wednesday, leaving the door open to the potential of four rate hikes taking place before the end of 2016. Meanwhile, the Bank of Japan took a step in the opposite direction by announcing the introduction of negative interest rates. The SPX opened Monday at 1,906.28 and closed Friday at the high of the week at 1,940.24, up 33.96 or 1.78% for the week.

Chart_013016_SPX

The chart show strong support at the 1820 level. Despite excursions to these levels twice in 2014 (April and October) as well as earlier in January of this year, the declines have halted at that level. If we are to see a breach of the 1820 level, that would be a strong indication that we are headed into bear market territory.
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