Stocks continued their move higher last month as the S&P 500 rallied over 5% in July. (YCharts) This brings the S&P 500 to breakeven for the year, something that many investors would have had a hard time imagining during the market lows in March. While the rally in stocks is much welcomed there is concern that the market’s recovery does not accurately reflect the damage done in the economy. We agree. While the market is generally considered a leading indicator, we don’t believe the dramatic move higher is an “all-clear” signal for stocks (or the economy).
We recently updated our economic dashboard by upgrading our Market Technicals indicator to green. The sustained move higher in stocks since the lows in March has shifted the underlying trend back to positive leading to this change.
June has come to a close and with that we leave behind a very eventful 1st half of 2020. Most of us probably wish we could fast forward into 2021 as the pandemic has been felt by all in one way or another.
We upgraded our business confidence indicator to yellow.
We recently updated two indicators on our economic dashboard: Market Breadth and Market Sentiment.
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 23rd. (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.