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

The major U.S. indices posted modest gains last week, led by the Russell 2000, which rose 1.1%. Last week’s rally puts the small-cap index up 10.2% for 2016, which is by far the best year-to-date performance for any of “the majors.”  The mid-July breakout in the Russell 2000 continues to target a move to 1,400 — almost 12% above Friday’s close — that will remain valid as long as the late-June, post-Brexit lows are not broken. #-ad_banner-# Last week’s broad-based advance was once again led by the financial sector. The… Read More

The major U.S. indices posted modest gains last week, led by the Russell 2000, which rose 1.1%. Last week’s rally puts the small-cap index up 10.2% for 2016, which is by far the best year-to-date performance for any of “the majors.”  The mid-July breakout in the Russell 2000 continues to target a move to 1,400 — almost 12% above Friday’s close — that will remain valid as long as the late-June, post-Brexit lows are not broken. #-ad_banner-# Last week’s broad-based advance was once again led by the financial sector. The only sectors of the S&P 500 to post losses were health care, energy and consumer discretionary.  Lack Of Fear Keeping Stocks Afloat I first warned Market Outlook readers that near-term downside risk exceeded upside potential in the July 18 report, and I have continued to beat that drum ever since. Seven weeks later, the benchmark S&P 500 is essentially unchanged, up less than 1% and apparently still stuck in neutral.   There are a number of reasons why the rally has stalled, including historically low volatility according to the Volatility S&P 500 Index (VIX) and formidable overhead resistance at the… Read More

All major U.S. indices closed lower last week, except for the small-cap Russell 2000. This followed two weeks of mostly sideways, non-directional trading. #-ad_banner-# The Nasdaq continues to negotiate its March 2000 tech-bubble highs amid historically low volatility. Both of these factors continue to warn of the broader market’s vulnerability to at least a minor pullback between now and the end of the third quarter.  Internally, the market may actually be more vulnerable than it looks. All sectors of the S&P 500 except for financials and technology finished in negative… Read More

All major U.S. indices closed lower last week, except for the small-cap Russell 2000. This followed two weeks of mostly sideways, non-directional trading. #-ad_banner-# The Nasdaq continues to negotiate its March 2000 tech-bubble highs amid historically low volatility. Both of these factors continue to warn of the broader market’s vulnerability to at least a minor pullback between now and the end of the third quarter.  Internally, the market may actually be more vulnerable than it looks. All sectors of the S&P 500 except for financials and technology finished in negative territory last week, led lower by utilities (-2.2%) and health care (-1.7%).  However, there is one potential bright spot. The table below, which displays Asbury Research’s metric for tracking investor asset flows in the State Street SPDR sector ETFs, shows that the largest inflows over the past one-week and one-month periods went into energy.   As long as these inflows into energy stocks continue, it bodes well for more strength from this economically sensitive sector, which, like materials and industrials, is correlated to the U.S. economy and the broader stock market. Seasonality Turns Negative In September For the… Read More

The U.S. stock market looked sluggish for the second consecutive week, with all major indices moving 1% or less. The best performer thus far in 2016 has been the small-cap Russell 2000, which closed last week up 8.9% year to date.  The two strongest sectors of the S&P 500 last week were energy (2.5%) and materials (1.2%). This is more evidence of the strength in the commodity space that I have been talking about since the first quarter. Of the 38 commodity-related ETFs that I track, only grains and solar remain in major downtrends, as defined by their… Read More

The U.S. stock market looked sluggish for the second consecutive week, with all major indices moving 1% or less. The best performer thus far in 2016 has been the small-cap Russell 2000, which closed last week up 8.9% year to date.  The two strongest sectors of the S&P 500 last week were energy (2.5%) and materials (1.2%). This is more evidence of the strength in the commodity space that I have been talking about since the first quarter. Of the 38 commodity-related ETFs that I track, only grains and solar remain in major downtrends, as defined by their 200-day moving averages. #-ad_banner-#​Where’s The Pullback? For the past several weeks, I have been warning of the stock market’s vulnerability to a pullback or correction before prices move appreciably higher. While the market hasn’t yet declined, it hasn’t moved meaningfully higher either. In the past month, the benchmark S&P 500 is up just 0.5%.   So, what’s holding the market up? In our first chart, we see that daily total net assets invested in the SPDR S&P 500 ETF (NYSE: SPY) have been above their 21-day moving average since July 1, indicating a trend of monthly expansion that my research… Read More

All major U.S. stock indices except the small-cap Russell 2000 posted a slight weekly gain. Despite last week’s poor showing, the Russell 2000 is actually leading the market higher this year, up 8.3% versus 6.9% for the benchmark S&P 500. #-ad_banner-# The week’s best-performing sectors were financials, which have benefitted from the recent rebound in long-term interest rates, and energy, thanks to oil’s rally from major underlying support near $41.  While I remain positive on the stock market between now and early next year, my research continues to warn that… Read More

All major U.S. stock indices except the small-cap Russell 2000 posted a slight weekly gain. Despite last week’s poor showing, the Russell 2000 is actually leading the market higher this year, up 8.3% versus 6.9% for the benchmark S&P 500. #-ad_banner-# The week’s best-performing sectors were financials, which have benefitted from the recent rebound in long-term interest rates, and energy, thanks to oil’s rally from major underlying support near $41.  While I remain positive on the stock market between now and early next year, my research continues to warn that near-term downside risk exceeds upside potential.  Another Major Obstacle For Market-Leading Technology In last week’s Market Outlook, I pointed out that the Nasdaq Composite had just posted its first weekly close above its 5,133 tech-bubble high. I said this boded well for a significant advance in the index over the next one to several quarters.  While the Composite managed another close above this important level on Friday, the chart below shows that its large-cap cousin, the Nasdaq 100, finished last week at 4,807, just below its corresponding high from March 2000 at 4,816. This… Read More