In last week’s report, I identified 2,121 as a key level to watch in the benchmark S&P 500, saying a breakdown below that level would clear the way for a deeper decline as we headed into Election Day. That is precisely what happened last week, as the major indices logged another weekly decline, led down by the Nasdaq 100 (-3%) and Russell 2000 (-2%).   Last week’s weakness was broad-based, with every sector of the S&P 500 finishing lower. The poorest performers were technology (-2.7%) and energy (-2.3%). We are at a major decision point where investors must draw some longer-term… Read More

In last week’s report, I identified 2,121 as a key level to watch in the benchmark S&P 500, saying a breakdown below that level would clear the way for a deeper decline as we headed into Election Day. That is precisely what happened last week, as the major indices logged another weekly decline, led down by the Nasdaq 100 (-3%) and Russell 2000 (-2%).   Last week’s weakness was broad-based, with every sector of the S&P 500 finishing lower. The poorest performers were technology (-2.7%) and energy (-2.3%). We are at a major decision point where investors must draw some longer-term conclusions as to where we are headed as a country. As is often the case, this political and economic decision point can also be seen in asset prices.  Stocks spiked on Monday, following news that the FBI said Hillary Clinton should not face criminal charges after a review of new emails. This action clearly indicates the market would be much more comfortable with a Clinton presidency. Fear Can Be a Good Thing Since mid-July, I have been warning that the extremely low market volatility — as evidenced by a reading in the Volatility S&P 500 (VIX) near 12 — would… Read More

All major U.S. indices finished in negative territory last week, giving back the previous week’s modest gains. They were led lower by the small-cap Russell 2000, which lost 2.5%. However, the four “majors” — the S&P 500, Dow Jones Industrial Average, Nasdaq 100 and Russell 2000 — are all still up 4% or more for the year. #-ad_banner-# The key level to watch is underlying support at 2,121 in the S&P 500, which has already been tested and held twice, on Sept. 12 and Oct. 13. A sustained decline below this level would represent a breakdown below the current three-month trading range. Read More

All major U.S. indices finished in negative territory last week, giving back the previous week’s modest gains. They were led lower by the small-cap Russell 2000, which lost 2.5%. However, the four “majors” — the S&P 500, Dow Jones Industrial Average, Nasdaq 100 and Russell 2000 — are all still up 4% or more for the year. #-ad_banner-# The key level to watch is underlying support at 2,121 in the S&P 500, which has already been tested and held twice, on Sept. 12 and Oct. 13. A sustained decline below this level would represent a breakdown below the current three-month trading range. It may also clear the way for a deeper sell-off in the weeks ahead. Last week’s strongest sectors were the defensive utilities (1%) and consumer staples (0.8%) groups, while real estate (-3.4%) and health care (-2.8%) were the weakest performers. Real estate was adversely affected by last week’s aggressive rise in long-term interest rates, which I will discuss in more detail later in the report. Market Fails To Rally From Oversold Conditions One way to determine the health of the market’s advance is by watching to see how it reacts to certain indicators and conditions. One of these conditions is… Read More

All successful stock market investors have one thing in common. Sure, they may have very different ideas and styles, but this one thing remains true across the board. No matter who you ask, from Warren Buffett to your local investment advisor, they will all agree on this single point.    #-ad_banner-#The point is there is a difference between price and value in the stock market. While the ordinary investor chases price, the winning long-term stock investor understands the importance of value. Understanding value enables you to purchase stocks that are underpriced in the market. These diamonds in the rough are often… Read More

All successful stock market investors have one thing in common. Sure, they may have very different ideas and styles, but this one thing remains true across the board. No matter who you ask, from Warren Buffett to your local investment advisor, they will all agree on this single point.    #-ad_banner-#The point is there is a difference between price and value in the stock market. While the ordinary investor chases price, the winning long-term stock investor understands the importance of value. Understanding value enables you to purchase stocks that are underpriced in the market. These diamonds in the rough are often stocks that will create wealth over the long term. One way to think about the difference between value and price is that value is real worth, while the price is nothing more than how much market participants are willing to pay. In other words, the price is often reflective of the herd mentality. And these numbers are typically far apart.   Investors are often willing to pay far more than stock is worth due to hype and upside price momentum. At the same time, stock prices can also be lower than the actual value of the stock. This is often… Read More

The major U.S. stock indices staged a very modest recovery last week. The fact that it was led by the tech-heavy Nasdaq 100, which rose 0.9%, is encouraging. However, historically low volatility, overly bullish investor sentiment and late-October seasonality warn that the market may not be out of the woods yet. Except for consumer staples (-0.3%) and industrials (-0.4%), all sectors of the S&P 500 finished in positive territory last week, led by materials (+1.6%) and financials (+1.2%). #-ad_banner-# Bigger picture, Asbury Research’s sector ETF-based metric shows that the biggest positive… Read More

The major U.S. stock indices staged a very modest recovery last week. The fact that it was led by the tech-heavy Nasdaq 100, which rose 0.9%, is encouraging. However, historically low volatility, overly bullish investor sentiment and late-October seasonality warn that the market may not be out of the woods yet. Except for consumer staples (-0.3%) and industrials (-0.4%), all sectors of the S&P 500 finished in positive territory last week, led by materials (+1.6%) and financials (+1.2%). #-ad_banner-# Bigger picture, Asbury Research’s sector ETF-based metric shows that the biggest positive percentage change in investor asset flows in the past one-month and three-month periods went into the energy sector, which is seen by many as a global economic barometer.  Investors Still Too Complacent Although I would love to show Market Outlook readers a different set of market metrics each week, my primary objective is to cover what I believe to be the most influential indicators to stock market direction at any given time. Given that criterion, market volatility remains at the top of the list.  The Volatility S&P 500 (VIX) index has been rising from a complacent extreme of 12 and… Read More

Last week, the major U.S. stock indices added to the previous week’s modest losses as investors seem to be wrapping their heads around an inevitable interest rate hike, which many believe will happen before the end of the year. The small-cap Russell 2000 (-2%) and tech-heavy Nasdaq 100 (-1.2%) led the way down, as they typically do, but the market weakness was broad based. All sectors of the S&P 500 closed lower except for utilities (+1.3%), real estate (+1.2%) and consumer staples (+0.1%). However, if interest rates manage to rise between now and year end, the gains in real estate… Read More

Last week, the major U.S. stock indices added to the previous week’s modest losses as investors seem to be wrapping their heads around an inevitable interest rate hike, which many believe will happen before the end of the year. The small-cap Russell 2000 (-2%) and tech-heavy Nasdaq 100 (-1.2%) led the way down, as they typically do, but the market weakness was broad based. All sectors of the S&P 500 closed lower except for utilities (+1.3%), real estate (+1.2%) and consumer staples (+0.1%). However, if interest rates manage to rise between now and year end, the gains in real estate and utilities are unlikely to last, as rising long-term rates act as a drag on home sales and make Treasuries more competitive for yield-seeking investor dollars. From an asset flows standpoint, Asbury Research’s own sector ETF-based metric shows that the biggest positive percentage change over the past one-month and three-month periods was in energy.   If this strength continues, it should push the energy sector higher, which would suggest a strengthening global economy and would bode well for higher equity prices overall into 2017. The Fear Factor In last week’s Market Outlook, I reviewed the Volatility S&P… Read More

The S&P 500 continues to trade within a relatively narrow four-month range, as investors await indication of when the Federal Reserve’s next interest rate hike will be and who will win the presidential election in November. The major U.S. stock indices closed only slightly lower last week, led down by the small-cap Russell 2000, which lost 1.2%. But a sector breakdown looks much worse, with every sector of the S&P 500 finishing the week in negative territory except for financials and energy. #-ad_banner-#The strength in financials was directly attributable to a big jump in long-term interest rates. The yield of… Read More

The S&P 500 continues to trade within a relatively narrow four-month range, as investors await indication of when the Federal Reserve’s next interest rate hike will be and who will win the presidential election in November. The major U.S. stock indices closed only slightly lower last week, led down by the small-cap Russell 2000, which lost 1.2%. But a sector breakdown looks much worse, with every sector of the S&P 500 finishing the week in negative territory except for financials and energy. #-ad_banner-#The strength in financials was directly attributable to a big jump in long-term interest rates. The yield of the benchmark 10-year Treasury note jumped from 1.56% on Sept. 27 to 1.75% on Oct. 6 — a 19-basis-point rise in just seven trading days. This move was apparently triggered by Fed Chair Janet Yellen’s semiannual testimony to the House Financial Services Committee, in which she said she expects the unemployment rate to move even lower but will not hold interest rates low for much longer.  Fear Continues to Act as an Invisible Lid on the Market I try to bring different charts and metrics into Market Outlook each week so it can be a learning tool as well… Read More

Editor’s note: In this week’s Market Outlook, John Kosar will lay out the reasons why investors should expect a near-term decline in stocks and why it’s not a good idea to put new money to work here on the long side. However, that doesn’t mean you need to sit on the sidelines waiting for a correction. Using a “backdoor” trading method, Jared Levy has turned similar declines into gains of 62.4% in nine days (2,532% annualized), 33.8% in four days (3,080.4% annualized) and 18.5% in a single day (6,759% annualized). If you’d like to get ahead of the next market… Read More

Editor’s note: In this week’s Market Outlook, John Kosar will lay out the reasons why investors should expect a near-term decline in stocks and why it’s not a good idea to put new money to work here on the long side. However, that doesn’t mean you need to sit on the sidelines waiting for a correction. Using a “backdoor” trading method, Jared Levy has turned similar declines into gains of 62.4% in nine days (2,532% annualized), 33.8% in four days (3,080.4% annualized) and 18.5% in a single day (6,759% annualized). If you’d like to get ahead of the next market correction, you can try his backdoor strategy with a 60-day, no-risk guarantee. Get the details here. The market took a breather last week following two consecutive weeks of gains, as most major U.S. stock indices finished just fractionally higher. The strongest performer was the tech-heavy Nasdaq 100, which gained just 0.4%, while the small-cap Russell 2000 brought up the rear, losing 0.2%. #-ad_banner-#  Bigger picture, the S&P 500 remains situated right in the middle of a three-month period of sideways investor indecision as two key questions overhang… Read More

Last week, investors apparently “bought the dip” to support at 2,121 in the S&P 500, which I discussed in the previous Market Outlook. However, the rally was led by the small-cap Russell 2000, which gained 2.4% and is now up 10.5% for the year compared to just 5.9% for the benchmark S&P 500.  In this new era of concerted monetary stimulus by central banks around the world, investors have been trained like Pavlov’s dog to fearlessly buy every minor stock market decline because they are confident that central banks — including our Federal Reserve — “have their back.”… Read More

Last week, investors apparently “bought the dip” to support at 2,121 in the S&P 500, which I discussed in the previous Market Outlook. However, the rally was led by the small-cap Russell 2000, which gained 2.4% and is now up 10.5% for the year compared to just 5.9% for the benchmark S&P 500.  In this new era of concerted monetary stimulus by central banks around the world, investors have been trained like Pavlov’s dog to fearlessly buy every minor stock market decline because they are confident that central banks — including our Federal Reserve — “have their back.” #-ad_banner-# This complacency in the marketplace has certainly kept stocks from going down over the past few months, but the lesser-known fact is that it has also capped the market’s upside. The S&P 500 finished last week at 2,165, almost exactly where it was two months ago.   Investor Complacency Cuts Both Ways This week’s first chart is one that I have brought out on several occasions this year to remind readers that too much complacency can be a bad thing.  The Volatility S&P 500 (VIX) index finished last week at 12.29, a… Read More

Last week’s stock market rebound was driven by an 11.4% weekly jump in Apple (Nasdaq: AAPL), as iPhone 7 momentum picked up, lifting the tech-heavy Nasdaq 100 2.9% for the week. The other major indices made a modest recovery following the prior week’s sharp decline. At the sector level, last week’s advance was predictably led by technology (2.3%), but defensive utilities (1.7%) and health care (0.8%) also performed well.  Spooked Investors Warn Of A Deeper Decline Despite last week’s splashy tech rally, investors are still apprehensive, if not outright afraid. The Volatility S&P 500 Index (VIX) finished last week… Read More

Last week’s stock market rebound was driven by an 11.4% weekly jump in Apple (Nasdaq: AAPL), as iPhone 7 momentum picked up, lifting the tech-heavy Nasdaq 100 2.9% for the week. The other major indices made a modest recovery following the prior week’s sharp decline. At the sector level, last week’s advance was predictably led by technology (2.3%), but defensive utilities (1.7%) and health care (0.8%) also performed well.  Spooked Investors Warn Of A Deeper Decline Despite last week’s splashy tech rally, investors are still apprehensive, if not outright afraid. The Volatility S&P 500 Index (VIX) finished last week at 15.37, well above its 50-day moving average at 13.01. I use the 50-day as a baseline to distinguish between a confident and nervous market.   As long as the VIX remains above 13.01 this week, it will warn that the market is vulnerable to a deeper decline.   Seasonality Also Warns Of Near-Term Weakness Seasonality statistically defines the historical performance of an asset at various times during the calendar year. Based on data since 1957, the benchmark S&P 500 historically peaks for the month of September on the 11th trading day, which was Sept. 16. And it… Read More

After two months of sideways market action, during which I’ve been warning of a stock market correction, the dam finally broke on Friday. The decline was led by the small-cap Russell 2000, which lost 2.6% for the week. But the move was broad-based, as all major indices finished more than 2% lower last week. #-ad_banner-# Depending on what you read, Friday’s sell-off was either triggered by institutional bond investor Jeffrey Gundlach of DoubleLine Capital’s talk of surprise tightening by the Federal Reserve or… Read More

After two months of sideways market action, during which I’ve been warning of a stock market correction, the dam finally broke on Friday. The decline was led by the small-cap Russell 2000, which lost 2.6% for the week. But the move was broad-based, as all major indices finished more than 2% lower last week. #-ad_banner-# Depending on what you read, Friday’s sell-off was either triggered by institutional bond investor Jeffrey Gundlach of DoubleLine Capital’s talk of surprise tightening by the Federal Reserve or Boston Fed President Eric Rosengren stating that it has become increasingly risky to delay an interest rate hike. In my opinion, though, Friday’s collapse was the result of two months of extreme investor complacency, as evidenced by a historically low Volatility S&P 500 (VIX) index (which I began talking about in the July 18 Market Outlook), rather than any particular statement by an influential market voice. In other words, the market has been vulnerable to a scare for months, and last week’s remarks by Gundlach and Rosengren were just the trigger to a gun that was… Read More