Market Psychology and the Risk of Compacency

With the markets reaching new all-time highs, I thought it would be worthwhile to consider how far the markets have run from the lows after the “Great Recession” of 2008/2009. The S&P 500 bottomed out at 666. As of today (August 27, 2018), the S&P 500 is trading at about 2,890, which represents a 333% gain since March of 2009. We can review multiple metrics to try to determine if…

Tech Weakness Continues to Drive Market Direction

Despite yesterday’s reprieve, stocks are pushing lower today with Technology stocks leading the way. Over the past few weeks, we have seen tech stocks trending lower, lead by the FAANG stocks – Facebook, Amazon, Apple, Netflix and Google (Alphabet). These stocks have been the darlings of the stock market rally over the past 4 years, but have now rolled over, and are dragging the rest of the tech sector, the…

Tech Stocks Continue to Diverge

In the past few weeks we have witnessed a marked change in leadership for the overall stock market, with Technology stocks, which were the previous leaders, weakening significantly. As evidence of this, we have seen the tech-heavy NASDAQ Composite Index trending lower, while the Dow and S&P 500 have maintained their strength. I have written about the FAANG stocks (Facebook, Apple, Amazon, Netflix and Google) – these stocks have been…

Techs falling apart despite overall market stability

Okay, I know it has been a while since I posted anything to my blog. Life is busy and complicated! Looking at the markets today, we are seeing a very interesting divergence between the NASDAQ, which is tech-heavy and is down about 1.75% today, and the S&P 500 and Dow, which are both about flat at the moment. The Dow was up about 100 points this morning, and the NASDAQ…

Fed leaves rates unchanged; cuts projected hikes to 2 from 4 in 2016

The Federal Reserve held interest rates steady Wednesday (3-16-16) and scaled-back its expectations for further rate hikes for 2016 and 2017. At its December meeting, the Fed projected four rate hikes in 2016, but new estimates released today reduced that number to two. Fed officials also cut their expectations for economic growth and inflation. In addition to the two rate increases this year, the Federal Open Market Committee now projects…

Fed Stays the Course, for Better of for Worse

The Fed did not change rates today, and didn’t change course in terms of their plans for raising rates over the coming quarters and years, at least in terms of the Fed statement released after their meeting today. This outcome, or lack of any change, is a bit of a double-edged sword – since they didn’t raise rates of state directly that they are concerned about financial markets (which we…

Stock Market Poised for Strong Performance for the Balance of 2016

Yesterday was a great opportunity to invest cash, with the market dropping significantly early in the trading session. I was able to invest a significant portion of my remaining cash, and am now about 90% invested with 10% cash remaining. the S&P 500 dipped as low as 1812 before rebounding nicely to end the session at 1859, still down about 22 points from the previous close, but up 47 points…

Finally, time to start buying!

Those of you who have been following my blog and published articles over the years know I have been sitting in cash for a very long time. Last year the markets really didn’t do much, so holding cash turned out to be a really good thing, especially considering the amount of risk in the market last year. The previous year (2014) was not the best year to sit in cash,…

China continues to threaten global markets

Last Friday I expected to see a more severe reaction to the removal of the circuit breakers in the Chinese market – a mechanism similar to that in the U.S., which stops stock market trading if the market falls by 7%. The Chinese government continues to intervene, both in the currency market buy selling dollar reserves and buying yuan, and by direct stock purchases to support their stock market, which…

Fourth Quarter 2015 Review/2016 Preview

The fourth quarter ended on a sour note, with a 178-point drop on the final trading day of the year. The first day of trading for 2016 was far worse, with the Dow Jones Industrial Average down almost 500 points during the trading session, before rebounding to close down 267. As we enter 2016 the Federal Reserve will take center stage, as their interest rate raising actions will drive economic…