The stock market rallied for a second straight month as the S&P 500 was up about 5% for May as many states began the process of “re-opening” the economy. (YCharts)  The rally in stocks came as investors tried to balance both good and bad news.  Good news came in the form of potential progress on a COVID-19 vaccine and therapies to treat the virus, monetary and fiscal stimulus around the globe, and anticipation of increased economic activity.  The bad news came in the form of very challenging economic data which included ongoing jobless claims, a contracting economy, and an official unemployment rate of 14.7%. (YCharts)

We continue to be positioned cautiously within portfolios as we weigh the impact of both good and bad news.  Our economic dashboard continues to flash warning signs which we believe are reflective of an ongoing recessionary environment justifying reduced risk for the time being.  We continue to watch closely the following risks which we believe have the potential to lead to future volatility:

We recently downgraded our Leading Economic Index (LEI) indicator to red.  We had moved this indicator to warning last month after the initial decline due to the COVID-19 pandemic. This indicator has further deteriorated at a rapid rate and we feel it should be downgraded again at this time.

We are another month into the COVID-19 pandemic and what a whirlwind it has been!  So much has changed over the past month in not only our day to day lives, but also in the stock market as we’ve seen a much-needed rally. The S&P 500 was up over 12% in April and about 30% from the lows on March 23^rd. (YCharts) While investors have been excited to see this move higher, we don’t believe that this rally has necessarily sounded the “all-clear” for stocks.  As such, we have used this move higher to what we believe is our advantage and have continued to try to reduce risk within portfolios.  

Despite stocks rallying, we saw historically weak economic data throughout April.  We’ve highlighted a few data points below that demonstrate the impact of shutting down most of the economy and sheltering at home

We recently updated our dashboard by downgrading the leading indicators and market breadth signals to yellow. 

Our everyday lives have changed dramatically over the last few weeks as we work together to minimize the impact of the COVID-19 pandemic. We know these efforts are necessary, but they also have come at a cost.

Global economic growth has been slowing, the US economy likely will contract, and US stocks have entered a bear market. Big stock market moves, both up and down, have become the norm. In short, this has been a challenging period for many long-term investors, and you’re asking what’s next and what to do.

We recently updated our economic dashboard by downgrading the Market Technicals indicator to yellow. This indicator is driven by historical prices.  As such, the recent market sell-off has had a negative impact on the underlying trend of the market.  

2020 got off to a strong start with the S&P 500 rallying almost 5% through the first 7 weeks of the year (YCharts); however, the market’s positive momentum came to an abrupt end during the last week of February.  US stocks pulled back about 13% amidst fears of a rapidly spreading coronavirus and the potential impact on the global economy.  We closed the month down roughly 8.5% for the year after several months of relative calm (YCharts). 

While the spread of the coronavirus wasn’t the only news in February, it has been the most talked about market risk over the last few weeks.  As such, we have outlined some key points when it comes to investing and the potential impact on your portfolios.

We recently updated our economic dashboard by upgrading the Market Sentiment indicator to green. 

Stocks had a mixed start to the year after finishing 2019 on a strong note.  The S&P 500 was down slightly, about -0.2%, in January as investors reacted to headlines ranging from coronavirus, the impeachment trial, and of course global trade. (YCharts)

The US-China trade war may have been the biggest story for investors last year and we have already seen major developments in the first few weeks of 2020.

We recently updated our economic dashboard by downgrading the Market Sentiment indicator to warning.  This indicator is considered a contrarian indicator: when investor sentiment becomes overly optimistic, we believe that it increases the chances of a market pullback.  Various measures of market sentiment have recently shown that investors may be overly-optimistic; however, this indic