Succinct Summation of Week’s Events 6.28.19 (plus The Wizard of Grand Rapids)

Once again I submit below the usual Sunday night weekly summation, the main positive being that the markets recovered most of the early week losses and ended June with some of its highest numbers ever. The biggest negative, as usual, is that the trade war optimism continues to fade as victory appears not so easy anymore. The bonus this Sunday is a Michigan based podcast from Roben Farzad, dubbed "The Wizard of Grand Rapids" and who has found a place among a handful of podcasts that Barry Ritholtz in his Big Picture blog consider worthy of following.  Hope everyone had a great weekend. 

The Level3 Withdrawal Strategy to Maximize Your Long-Term Wealth

Since in the AAII we have become fond of this new trading strategy that has been dubbed Level 3, I submit for your reading this weekend Article #35 of the AII Top 40 that has been revisited these past couple of months. This article from November 2017 not only sums up the whole Level 3 approach but focuses specifically on the most important aspect of investing -- withdrawal strategy to maximize return.  Enjoy the article and enjoy the beautiful weekend.

Wall St. wraps up its best June in decades as G20 convenes

Today’s market, still dancing on optimism that at least something positive will come out of G20, perhaps even a ceasefire on the tariff war, rallied over a hundred points by noon, then dropped again but at least recovered in the final hour to close 73 up.  But G20 wasn’t the only trigger. With the Dow and S&P finishing off June with a better performance since 1938 and 1955 respectively, there was a lot to feel positive about.  There was also a teeny bit of negative economic news to bolster hopes again for a July rate cut.  Volume was very high at over 10.2 billion, but this is a fake number since it includes the annual restructuring of the Russells, skewing the number considerably.  We won’t have a reliable number until Monday. 

S&P 500 rises on investor optimism ahead of G20 summit

Today was yesterday in reverse. Instead of starting high and coming down, the market started down, came up, then ended up in a wash again.  The S&P remains within 1% of its all time high but whipsawing has become chronic due to mixed messages on the China issue.  Perhaps it was best expressed by today’s expert, “Today’s trading is a G20 pregame,” meaning that as much as we’ve been plagued by mixed messages, the consensus is that something positive will come out of the summit and there will be reduced tensions.  Sentiment was enough to push the chip index back up but volume understandably remains below average at just over 6.1 billion. 

And okay, what happened with Tuesday's post that I suddenly got 133 views when I usually get 10-15?  What was different about the post, "Wall Street Sinks As Hope Fades for Rate Cuts"?  

S&P 500 dips as healthcare declines counter tech gains

It was another day of the market trying to find its direction and ending basically flat.  There was optimism at first when Mnuchin commented that a deal with China was imminent, then optimism lost when the White House retracted the statement.  A rise in non-defense goods was offset by a drop in orders for durable goods and volume ended below average at 6.7 billion. 

Wall Street sinks as hopes fade for rate cuts, trade progress

Today there was a lot of confusing information with Fed officials Powell and Bullard reacting to yesterday’s Trump tweet that the Fed “doesn’t know what it’s doing” by making statements that rate cuts might not happen in July after all.  That plus another Trump statement indicating that there might not be good news coming out of G20 caused a rush to the exits and a general consensus that “optimism is waning a little bit.”  There was also less than wonderful economic news with reports that new home sales and consumer confidence came in below forecasts.  All in all, the Dow dropped steadily throughout the day to close 179 down on volume of 7 billion shares. 

S&P 500 slips as healthcare drags, investors eye G20 summit

The day started nearly a hundred points up but gradually came down throughout the session to lose almost all the gains and close up 8 points.  The bottom line is that the market continues to digest the Fed and sit on the fence awaiting what happens at G20.  Despite the slow day, the S&P remains just a hair below its all-time high.  As was expected, volume was below average at 6.3 billion. 

Succinct Summations of Week’s Events for 6.21.19 (plus Sell Rules to Build Your Stock Investing Performance)

The usual weekly summation can be found below, the positives being a very good week for the market based mostly on the Fed doing what investors wanted. Ironically again the negative is the flip side of the FOMC position that by keeping rates low there could be political blowback which could develop into a problem.  This Sunday's bonus is a follow up on yesterday when I presented an article on how to determine when to buy.  Now I submit another article from AAII (#22 or 40) on using the CANSLIM method to determine when to sell.  Hope everyone enjoyed this beautiful weekend. 

Morpheus: How To Know When Is The Right Time To Start Buying Stocks Again

For your reading this weekend I refer you to an article published in October 2014 on a subject that is at the very core of successful investing strategy.  Last weekend I presented articles from the AAII on how to select stocks.  This weekend we'll begin with this write up from Morpheus Trading Group on how to decide when to buy.  Tomorrow I'll conclude this theme with an article about when to sell.  Enjoy the sunshine.  It's about time we get to dry out a little. 

Bang-up week on Wall Street ends with a whimper

The Dow was up about 150 points mid-morning but then slid to be up around 60 points most of the rest of the day until the final minutes when it suddenly dove to close down 34.  So the commentary below that it was Pence’s cancellation of his China speech that caused the market to edge down doesn’t really make any sense.  What does make sense is that the market is taking a breather after yesterday’s big rally and the money is now focused on the G20 summit June 28^th.  So despite the indexes logging a third consecutive week of gains after a very bad May, it’s back to sitting on the fence until G20.  Volume was very high at 8.6 billion but this is a fake number since it includes all the quadruple witching.  We’ll have a clearer picture of true volume on Monday. 

Rate-cut euphoria elevates S&P 500 to record high

It was another triple digit gain with the Dow up 249 with the market still reacting to this week’s Fed meeting and the rising hopes of rate cuts as early as next month.  These hopes have triggered a jump in the S&P of 7% now for June so far and today closing above its previous record on May 3^rd.  Oil prices also surged due to rising tensions with Iran and the prospect that such tensions may be restricting supplies of crude.  Adding to the optimism was another week of unemployment benefits falling more than expected pointing to strength in the labor market.  Volume was above the 4-week average at 7.5 billion. 

Stocks approach record as Fed soothes Wall Street's fears

It was a modestly up day with the Dow climbing 38 points when the Fed announced that it was going to do exactly what everyone was expecting – keep rates steady while pointedly hinting that rate cuts were coming.  With yesterday’s huge rally, today’s gains put both the S&P and Dow less than 1% away from their record highs set in April.  The hope for rate cuts has pushed the S&P up 6% this month and today the central bank sent signals that the market can expect as much as a ½% in cuts by the end of the year.  But the trade war is what really counts and the G20 summit will give many more clues on that.  Volume was just a little below the 4-week average at 6.5 billion. 

Wall Street nears record as mood on trade again turns optimistic

Today investors finally got off the fence and bet big on the market pushing the Dow up 353 points. The trigger is allegedly Trump’s remarks that he will restart trade talks with China.  But we’ve heard this before and, as noted, there have been repeated rallies and retreats based on Trump’s progress or lack thereof.  This prompted today’s expert to say, “I’d wait for the G20 meeting to see actual discussion” about the trade talks.  Tomorrow the Fed is widely expected to change nothing but lay a foundation for rate cuts later this year.  It is the hope of cuts that has now propelled the S&P forward 6% in June.  The Q2 forecast has today changed dramatically from April when 2.8% growth was predicted; now the estimate is a mere 0.2%. But this happened in Q1 too with an initial forecast of -2% and it turned out closer to +2%.  So let’s take these forecasts with a gigantic grain of salt and we’ll just see.  Volume was slightly above the 4-week average at 7 billion. 

Faith in the Fed nudges Wall Street higher

The day started in the red but quickly rose nearly 200 points before finally sinking to close just 22 up.  Again everyone is on the fence awaiting tomorrow’s Fed meeting and the G20 later this month, hoping that both will be encouraging on trade and discouraging on the general economy (and thus encouraging for rate cuts.)  As today’s expert stated, “We’re back to the idea that bad news is good news.”  The hopes for a rate cut have been the main driving force driving the S&P up 5% this month and the Fed’s Empire State gauge has business growth falling to its lowest level in 2-1/2 years, again good support for rate cuts. Until more good news is forthcoming, volume remains below average at just under 5.7 billion. 

Succinct Summation of Week’s Events for 6.14.19 (plus “What Works”: Key New Findings on Stock Selection)

Below is the usual weekly summation, the main positives being an increase in industrial production double the forecast and roughly 50,000 more new job openings than expected.  The corresponding negative is 3,000 more jobless claims than previous but the 50,000 new openings should be good news for those people.  The bonus this time is Article #36 of the AAII Top 40 which follows along the same theme as yesterday, "New Findings on Stock Selection."  Hope everyone enjoyed the soggy weekend. 

The Advantages of Quantitative Approaches to Stock Selection

For your weekend reading this time I present an article all you techies should appreciate -- from the May 2017 AAII Journal, an interview with the head of the T. Rowe Price Quantitative Equity Group discussing the pros of quant strategies in stock selection.  Hope you are all enjoying this soggy weekend.  And for all you dads out there, enjoy your Father's Day. 

Wall Street ends down; Broadcom warning hits chip stocks

It was a classic case of fence sitting as the Dow dropped over a hundred points at open to slowly regain ground throughout the session as investors pondered the trade war, next week’s Fed meeting, and reports showing the worst slowdown in China’s growth in 17 years.  All of it put the market on “pins and needles” awaiting hopeful rate cuts, in fact hopeful for three rates this year. The one positive is that retail sales have increased indicating that consumer spending is picking up so Q2 may not have the feared sharp contraction after all.  Nonetheless, it’s “wait-and-see” as reflected in the considerably below average volume of under 5.9 billion. 

Wall St. climbs as oil jumps after Gulf tanker attacks

Who would have thought that a military attack by a hostile foreign power on shipping would actually cause a market rally?  But that’s what happened when Iran attacked two tankers in the Gulf of Oman, thereby causing the price of oil to rebound on speculation about supply disruption. But while oil futures rose more than 2%, investors remain skittish as the Dow bounced back and forth all day through a 150 point range but closing 101 points up.  Caution is the order of the day as the market awaits next week’s Fed meeting and the G20 summit later in the month while overall sentiment remains doubtful on trade improvement.  Volume remains below average at just under 6 billion. 

Wall St. slips; banks fall with prospect of rate cut, energy drops

The day started a few points in the black but then immediately receded as investors sit on the fence waiting to see what the Fed is going to do.  Dragging on the market was falling oil prices which took the energy index down 1.4% with crude down 4 percent.  But today’s bad news taken as good news is that consumer prices rose 0.1% in May pointing to moderate inflation and bolstering the case for a rate cut.  Banking stocks in turn dropped 1.4% since rate cuts are a negative in that sector.  The Fed meets next week and meanwhile investors are reducing exposure to stocks.  The Dow is down 43 points on below average volume of just under 6 billion. 

Wall Street treads water after recent rally

Today’s session started almost 200 points up, mostly as investors continued to absorb the good news from Mexico, but then slid the rest of the day to close 14 down.  As stated yesterday, China remains the primary source of jitters and today reflected a more pessimistic view of progress on that front.  Producer prices increased for a second straight month pointing to rising inflationary pressures and the big bets remain on a July rate cut, though some pundits caution that such optimism may be premature. Volume was just a tad below the 4-week average at just over 6.7 billion. 

Wall Street rises on Mexico relief, Dow up a sixth day

It was almost another 3-digit rally with the Dow up 230 points at noon while investors reacted to the news of the Mexican tariffs being canceled over the weekend.  But then it slid the rest of the day to close just 78 up.  Part of this is undoubtedly the fact that China remains the primary problem; Mexico was always secondary. Part of it is that whereas the morning was a relief rally there remains trepidation that too much optimism is being placed on a July rate cut.  Still, the S&P has now recovered to just 2% below its May record but wait-and-see remains the order of the day which is reflected in the below average volume of just under 6.5 billion. 

Succinct Summation of Week’s Events 6.7.19

Here comes the weekly summation again, this time the positives win hands down with the markets rallying 5% on expectations of a July rate cut.  The big negative is on the flip side, that is the historical trend that the market usually overestimates the odds of rate cuts so all of this week's optimism may be short lived.  The bonus this Sunday night is another article from this week's AAII Top 40.  This #29 continues the theme from yesterday, but tonight goes directly to the source of fund trickery, which is the deceptive advertising and how we can learn to spot it.  Hope everyone had a great weekend.

Cherry-Picking Data to Make Active Managers Look Good

For all you individual active investors reading this, you may be very interested in this recent AAII article about the very problem to avoid in active investing -- how active managers cherry pick data to make their funds look better than they really are.  And how to spot this.  It should make for some worthwhile weekend reading.  Enjoy the rest of it.  After this beautiful day, rain tomorrow! 

Wall St. rallies on hopes of U.S. rate cut, trade progress

It was another big 3-digit day with the Dow zooming up all day long to close 263 up with once again bad news (a way under forecast payrolls report) taken as good news (the Fed cutting rates in July.)  There is a downside to this as today’s expert points out, “We’re addicted to low rates” which is and always has compromised our ability to achieve real growth. Investors don’t really seem to care right now, just hoping for the lower rate and a resolution to the Mexican stand-off on tariffs and trade, which is now considered to have “a good chance” of happening. Both tech stocks and the chip index benefited. Volume was a little below average at about 6.5 billion. 

Wall Street rises with hopes of Mexican tariffs delay

For the third straight day there was a triple-digit gain in the Dow due to unconfirmed reports that Trump may delay the Mexican tariffs, providing more hope for a quick resolution. There was also a confirmed report that Mexico would deploy 6,000 troops to the southern border with Guatemala as part of a possible immigration deal.  But long-term clarity about trade remains wanting and there was some fence-sitting today awaiting Friday’s U.S. jobs report accounting for the below average volume of 6.7 billion.  Consensus remains that “trade agreements need to be reached in order to push economic growth higher.” 

Wall St. climbs as weak private jobs data boost rate cut hopes

It was another big 3-digit rally today with the Dow bolting up another 207 points whereas, as has happened before, bad news gets taken as good news.  Today’s bad news was a poor employment report bolstering the case for a weakening job market and overall economy.  But, after all, a weakening economy also bolsters the case for the Fed to cut rates, which is something investors very much want right now. So the low new jobs number caused a big rally which was further bolstered by more hopes that a deal will be reached with Mexico.  But a rate cut is the big thing right now and the market is betting on one for July.  Volume was close to the 4-week average at just a hair over 7 billion. 

Wall Street soars on U.S. rate cut hopes

Well, the techies proved to be right today.  They’ve said for the last couple of sessions that the Nasdaq had reached a critical resistance level and was due for a comeback despite having flirted 0.2% below correction level yesterday.  Today everything came back big guns with the Dow soaring over 500 and the Nasdaq nearly 200 all on the “little bit of a spark” from St. Louis Fed chief James Bullard that a rate cut may be coming. Not that such an event will make all things right again as “we’re going to continue seeing tariffs take us back and forth” but it’s exactly what the market’s been looking for. There was also a boost of hope with Republicans potentially challenging the new Mexican tariffs and the Mexican president expressing hope that a deal could be reached.  T-bill rates also rose boosting the S&P bank index over 3.6 percent but there was no statement as to whether the yield curve remains inverted. Volume was not as vigorous as yesterday’s tumult but, at over 7.5 billion shares traded, it was far from anemic. 

Nasdaq confirms correction as Facebook, Alphabet, Amazon drag

The Nasdaq entered correction territory today by 0.2% and the Dow almost had as bad a day falling 135 points before recovering in the final minutes to break even. Besides the China-sensitive internet heavies Facebook and Alphabet having very bad days, another trigger was Trump’s decision to revoke India’s status as a developing country and thus ending preferential trade treatment for them.  And the inverted yield curve went into its fourth consecutive day and wider than ever.  Given that the Nasdaq has now broken an important resistance level, the expectation is that it should now start to climb.  So that’s where all eyes will be tomorrow for, if it breaks even lower, the index is expected to fall.  There was a scurry of activity today to rush into the safety of T-bills which is why the yield curve continues to invert and was reflected in the very high volume of over 8.3 billion. 

Succinct Summations of Week’s Events 5.31.19 (plus The Path Of Lease Resistance Looks To Be...)

It's time for the weekly summation, the positive being that despite all the tumult in May, the economy overall remains resilient which is reflected in the higher consumer confidence numbers.  But the negatives were quite daunting from the new tariffs on Mexico which even the gurus on Wall Street think is a bad idea, to the retaliation China is planning against the U.S. in the trade war to the effects all of the above had on the market this past week. 

“We could have a heck of a nice second half of the year.”

The following email was sent to me yesterday from the AAII promoting the big investor conference in Orlando in late October.  But after the drubbing the market has taken in the month of May, I thought everyone might appreciate hearing a voice of optimism coming from the guru who will be the keynote speaker.  It might also be worth checking out his long running missive "Economic and Market Perspective" which Money Magazine has placed in their "101 Things Every Investor Should Know."  Enjoy the rest of your weekend.