Market Update
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The S&P 500 (SPX) gave back all of Tuesday’s gains – and then some – on Wednesday, dropping down to a new low for this correction, at 1265.
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Market Update
Equity markets “caught a bid” on Tuesday, but this is still all just movement characteristic of a consolidation pattern.
Still Overbought
While the simultaneous expiration of contracts for stock index futures, stock index options, stock options and single, stock futures only occurs four times a year (aka “quadruple witching expiration” and that being today), two of the four major stock market indices broke their recent winning streaks. At the final bell, the DJIA and the NASDAQ gained 45 points and two points respectively; the S&P 500 and NYA closed lower. On the NYSE, volume contracted to 924 million shares.
Market Update: May 2012
The S&P 500 (SPX) has tested 1366 on the upside twice, and not had any success even hanging around this level, as it’s been pushed down quickly both times. This doesn’t bode well for an upside resolution in the near term, but it’s certainly a possibility.
Market Update: November 14, 2011
A positive sign that has come as a result of the back and forth action in the markets over the past couple of weeks is the emergence of a triangle pattern in the S&P 500 (SPX). A triangle pattern, in and of itself, is neither a bullish pattern nor a bearish pattern until the pattern has completed.
The Employment Outlook
The June Employment Report was disappointing. Nonfarm payrolls rose less than expected. Figures for April and May were revised lower. Average weekly hours declined. Temp-help employment fell. There were no bright spots. That doesn’t mean that the economy won’t recover in the second half, but headwinds will prevent growth from being a lot stronger.
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Market Update
Equity markets “caught a bid” on Tuesday, but this is still all just movement characteristic of a consolidation pattern.
Still Overbought
While the simultaneous expiration of contracts for stock index futures, stock index options, stock options and single, stock futures only occurs four times a year (aka “quadruple witching expiration” and that being today), two of the four major stock market indices broke their recent winning streaks. At the final bell, the DJIA and the NASDAQ gained 45 points and two points respectively; the S&P 500 and NYA closed lower. On the NYSE, volume contracted to 924 million shares.
Market Update: May 2012
The S&P 500 (SPX) has tested 1366 on the upside twice, and not had any success even hanging around this level, as it’s been pushed down quickly both times. This doesn’t bode well for an upside resolution in the near term, but it’s certainly a possibility.
Market Update: November 14, 2011
A positive sign that has come as a result of the back and forth action in the markets over the past couple of weeks is the emergence of a triangle pattern in the S&P 500 (SPX). A triangle pattern, in and of itself, is neither a bullish pattern nor a bearish pattern until the pattern has completed.
The Employment Outlook
The June Employment Report was disappointing. Nonfarm payrolls rose less than expected. Figures for April and May were revised lower. Average weekly hours declined. Temp-help employment fell. There were no bright spots. That doesn’t mean that the economy won’t recover in the second half, but headwinds will prevent growth from being a lot stronger.
No Recession, At Least For Now
Later this month, the government will release the advance estimate of 3Q11 GDP growth. There are uncertainties in that estimate – inventories and foreign trade make up a relatively small part of the economy, but account for much of the quarterly variation in GDP growth. We already have a good idea regarding the “meat and potatoes” of that report. Consumer spending and business fixed investment expanded further in the third quarter, suggesting no recession in the near term. However, the economic outlook for 2012 is a lot less clear.
The Economic Outlook – In A Holding Pattern
Recent economic figures have been consistent with the view of lackluster-to-moderate growth in the near term – not a recession, although the risk of a renewed downturn remains. Whether the U.S. slips back into recession depends on a number of factors: gasoline prices, developments in Europe, and policies that may or may not come out of Washington, D.C.
August Jobs Report- No Sign of a Double Dip
As with most of the recent data reports, the August Employment report was consistent with a near-term slow patch in economic growth, but not a double dip. Private-sector growth in nonfarm payrolls remained positive, and figures for the previous two months were revised higher. However, while the job numbers were better than expected, the pace is nowhere near where we’d like it to be.
Inflation and the Fed
A year ago, in a sharply weakening economy, deflation seemed a credible threat. However, a rebound in energy prices has boosted the Consumer Price Index over the last 12 months. Improvement in the global economy has led to a firming in commodity prices. Despite the diminished threat of deflation, core inflation at the consumer level has trended lower, thanks in large part to weakness in rents (a consequence of residential housing troubles).
Under the Weather
The recent economic data have been generally weaker than expected, casting some doubt on the prospects for the recovery. However, economic recoveries are not usually associated with steady growth across sectors. Growth is inherently uneven. That means that some economic reports will be strong and some weak – and that is especially true in the current environment, where the economy has to deal with a number of serious headwinds. Economic statistics are also subject to seasonal adjustment difficulties and, as we’re likely to see in much of the February data, the peculiarities of the weather. Bad February weather will not cause a double dip, but it may add to the unease in the financial markets in the near term.
The Fed Outlook: Uncertainty and Reluctance
The Federal Open Market Committee policy statement and Chairman Bernanke’s post-meeting press conference held few surprises. Monetary policy is still accommodative – and still on hold. There’s also apparently little will at the Fed to do more to help the recovery along. Fortunately for the Fed and the consumer, we can catch a break if oil prices continue to decline.
On the Cusp of Job Growth
Nonfarm payrolls fell by 36,000 in the advance estimate for February, and would have likely been positive if not for the weather. It’s impossible to estimate precisely the impact that the snowstorms had on payrolls and average weekly hours, but we should see a rebound in the March employment figures. Hiring for the 2010 census is underway, and is expected to peak in May. Unfortunately, those temporary census jobs will be shed in June and the months that follow. Still, looking beyond the impact of the census, job growth is nearly here.
Policy Conundrums
In the last few months, some have taken to calling the current economic period, “the Lesser Depression” (instead of “the Great Recession”). There’s no precise definition of “a depression” (and as it is, the definition of “a recession” is rather vague). Most economists would say a depression is a lengthy period of elevated unemployment. That’s exactly what we may be staring out now. Monetary and fiscal policy could provide further support for growth, but there’s a lot of resistance.
S&P 500: Near-Term Resistance Proves Formidable
WHEAT: When Panic Buying Begets Panic Buying
The following commentary caused me to look at a six month chart of Wheat:
Russia Bans Grain Exports after Drought Shrivels Crop: Russia announced Thursday that it would ban grain exports through the end of the year, a response to a scorching drought that has destroyed millions of acres of Russian wheat and hobbled the country’s agricultural revival. The ban on grain exports by Russia, one of the world’s largest wheat producers, helped propel wheat prices in the United States toward their highest levels in nearly two years.
New 401(k) Plan Disclosure Rules
Background
As 401(k) plans have become more popular, plan participants have become increasingly responsible for making their own retirement savings decisions. The Department of Labor (DOL) has become concerned that participants in self-directed 401(k) plans (those that allow participants to direct the investment of their own accounts) might not have access to, or might not be considering, information critical to making informed decisions about the management of their accounts--particularly information on investment choices, fees, and expenses.
Boston!
I love Boston! My love affair with the city began in the late 1960s when I first heard the group “Beacon Street Union” playing on the banks of the muddy Charles. In 1971 I entered this business and the love affair grew into the early 1980s when we as “kids” whispered the names of legendary investors like Peter Lynch, Dean LeBaron, Paul Cabot, and David Babson while discussing markets at various Boston cocktail parties.
The 2010 Federal Estate Tax Choice
To pay or not to pay, that is the question -
On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (the Act) into law. The Act reinstated the federal estate tax for persons who died in 2010, retroactively applying a 35% maximum estate tax rate and a $5 million estate tax exemption. The Act also allows those estates to opt out of the tax. For some estate executors, a choice must be made between paying the tax or not paying the tax. Why would an executor choose to pay the estate tax? There's a good reason.
Fed Policy Outlook – Changes On The Way
The Federal Open Market Committee will meet on Tuesday to set monetary policy. The Fed is widely expected to leave short-term interest rates unchanged and the wording of the economic assessment should be largely the same as in the previous statement. However, we could see another round of asset purchases or some changes to the Fed’s communications.
The Policy Stakes Are Raised
It’s well known that recessions that are caused by financial crises are much more severe, are longer lasting, and are followed by gradual recoveries. Another lesson from history is that during these recoveries, policies are often tightened too soon. In 1937, efforts to balance the budget led to a recession within the Great Depression. It’s said that those who don’t remember the past are doomed to repeat it.
She's Got Legs
“She’s got legs, she knows how to use them,” the year was 1990 and the group – ZZ Top; except in this case I am not talking about the hit song, but rather the stock market for after a somewhat “kiss your sister” type session the Dow put “legs on” to the upside late last Friday. “She’s got legs” indeed for the session may have locked up the lows, at least on a short-term basis.
More Churning
Despite a round of better-than-expected economic news, stock market indices negatively reversed, from up to down, yesterday and ended with losses. Profit-taking due to the end of the month, the quarter, and fiscal year for some mutual funds combined with a failed intraday breakout after “resistance” stood its ground and an overbought situation [please refer to the chart titled: “Percentage of NYSE stocks above their 10 week (50-day) moving average”] helped aid yesterday’s negative reversal. After being up 115 points at the open, the DJIA ended lower by 47 points; the NASDAQ recorded a similar reversal and closed down eight points. The S&P 500 and the DJIA both enjoyed their best “September” since 1939, rallying 9% and 8%, respectively. The NASDAQ surged 12% last month.
What Sort Of Rebound in 2H11?
The recent data have been mixed, consistent with a slower rate of economic growth in the near term. The economy faced a number of headwinds in the first half of the year. Some of those headwinds are likely to be temporary. Others will linger. Growth should pick up in the second half of the year, but the pace seems unlikely to be especially strong
What To Watch For In Early 2011
One of the key themes for investors in early 2011 is likely to be a shifting economic picture. For the stock market, things tend to be all or none. That is, either the economy is booming or it’s falling apart – there’s not much ground in the middle. Investors seem to struggle with moderate and uneven economic growth. The tax cut package has taken the double-dip recession scenario off the table, but the data for the next few months are likely to be mixed, suggesting strong growth in one set of figures and more moderate growth in another. That back and forth should create some opportunities for investors.
The Job market, Oil Prices, and the Fed
On the surface, the February Employment Report was strong, but the details suggest more moderate improvement in the labor market. Still, new hiring is likely to pick up in the spring. Higher oil prices threaten the outlook for jobs and the overall economy. The Fed appears to be in a tough spot, but should keep monetary policy accommodative for some time.
The American Taxpayer Relief Act of 2012
The new year began with some political drama, as last-minute negotiations attempted to avert sending the nation over the "fiscal cliff." Technically, we actually did go over the cliff, however briefly, as a host of tax provisions and automatic spending cuts took effect at the stroke of midnight on December 31, 2012.
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No Recession, At Least For Now
Later this month, the government will release the advance estimate of 3Q11 GDP growth. There are uncertainties in that estimate – inventories and foreign trade make up a relatively small part of the economy, but account for much of the quarterly variation in GDP growth. We already have a good idea regarding the “meat and potatoes” of that report. Consumer spending and business fixed investment expanded further in the third quarter, suggesting no recession in the near term. However, the economic outlook for 2012 is a lot less clear.
The Economic Outlook – In A Holding Pattern
Recent economic figures have been consistent with the view of lackluster-to-moderate growth in the near term – not a recession, although the risk of a renewed downturn remains. Whether the U.S. slips back into recession depends on a number of factors: gasoline prices, developments in Europe, and policies that may or may not come out of Washington, D.C.
August Jobs Report- No Sign of a Double Dip
As with most of the recent data reports, the August Employment report was consistent with a near-term slow patch in economic growth, but not a double dip. Private-sector growth in nonfarm payrolls remained positive, and figures for the previous two months were revised higher. However, while the job numbers were better than expected, the pace is nowhere near where we’d like it to be.
Inflation and the Fed
A year ago, in a sharply weakening economy, deflation seemed a credible threat. However, a rebound in energy prices has boosted the Consumer Price Index over the last 12 months. Improvement in the global economy has led to a firming in commodity prices. Despite the diminished threat of deflation, core inflation at the consumer level has trended lower, thanks in large part to weakness in rents (a consequence of residential housing troubles).
Under the Weather
The recent economic data have been generally weaker than expected, casting some doubt on the prospects for the recovery. However, economic recoveries are not usually associated with steady growth across sectors. Growth is inherently uneven. That means that some economic reports will be strong and some weak – and that is especially true in the current environment, where the economy has to deal with a number of serious headwinds. Economic statistics are also subject to seasonal adjustment difficulties and, as we’re likely to see in much of the February data, the peculiarities of the weather. Bad February weather will not cause a double dip, but it may add to the unease in the financial markets in the near term.
The Fed Outlook: Uncertainty and Reluctance
The Federal Open Market Committee policy statement and Chairman Bernanke’s post-meeting press conference held few surprises. Monetary policy is still accommodative – and still on hold. There’s also apparently little will at the Fed to do more to help the recovery along. Fortunately for the Fed and the consumer, we can catch a break if oil prices continue to decline.
On the Cusp of Job Growth
Nonfarm payrolls fell by 36,000 in the advance estimate for February, and would have likely been positive if not for the weather. It’s impossible to estimate precisely the impact that the snowstorms had on payrolls and average weekly hours, but we should see a rebound in the March employment figures. Hiring for the 2010 census is underway, and is expected to peak in May. Unfortunately, those temporary census jobs will be shed in June and the months that follow. Still, looking beyond the impact of the census, job growth is nearly here.
Policy Conundrums
In the last few months, some have taken to calling the current economic period, “the Lesser Depression” (instead of “the Great Recession”). There’s no precise definition of “a depression” (and as it is, the definition of “a recession” is rather vague). Most economists would say a depression is a lengthy period of elevated unemployment. That’s exactly what we may be staring out now. Monetary and fiscal policy could provide further support for growth, but there’s a lot of resistance.
S&P 500: Near-Term Resistance Proves Formidable
WHEAT: When Panic Buying Begets Panic Buying
The following commentary caused me to look at a six month chart of Wheat:
Russia Bans Grain Exports after Drought Shrivels Crop: Russia announced Thursday that it would ban grain exports through the end of the year, a response to a scorching drought that has destroyed millions of acres of Russian wheat and hobbled the country’s agricultural revival. The ban on grain exports by Russia, one of the world’s largest wheat producers, helped propel wheat prices in the United States toward their highest levels in nearly two years.
New 401(k) Plan Disclosure Rules
Background
As 401(k) plans have become more popular, plan participants have become increasingly responsible for making their own retirement savings decisions. The Department of Labor (DOL) has become concerned that participants in self-directed 401(k) plans (those that allow participants to direct the investment of their own accounts) might not have access to, or might not be considering, information critical to making informed decisions about the management of their accounts--particularly information on investment choices, fees, and expenses.
Boston!
I love Boston! My love affair with the city began in the late 1960s when I first heard the group “Beacon Street Union” playing on the banks of the muddy Charles. In 1971 I entered this business and the love affair grew into the early 1980s when we as “kids” whispered the names of legendary investors like Peter Lynch, Dean LeBaron, Paul Cabot, and David Babson while discussing markets at various Boston cocktail parties.
The 2010 Federal Estate Tax Choice
To pay or not to pay, that is the question -
On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act (the Act) into law. The Act reinstated the federal estate tax for persons who died in 2010, retroactively applying a 35% maximum estate tax rate and a $5 million estate tax exemption. The Act also allows those estates to opt out of the tax. For some estate executors, a choice must be made between paying the tax or not paying the tax. Why would an executor choose to pay the estate tax? There's a good reason.
Fed Policy Outlook – Changes On The Way
The Federal Open Market Committee will meet on Tuesday to set monetary policy. The Fed is widely expected to leave short-term interest rates unchanged and the wording of the economic assessment should be largely the same as in the previous statement. However, we could see another round of asset purchases or some changes to the Fed’s communications.
The Policy Stakes Are Raised
It’s well known that recessions that are caused by financial crises are much more severe, are longer lasting, and are followed by gradual recoveries. Another lesson from history is that during these recoveries, policies are often tightened too soon. In 1937, efforts to balance the budget led to a recession within the Great Depression. It’s said that those who don’t remember the past are doomed to repeat it.
She's Got Legs
“She’s got legs, she knows how to use them,” the year was 1990 and the group – ZZ Top; except in this case I am not talking about the hit song, but rather the stock market for after a somewhat “kiss your sister” type session the Dow put “legs on” to the upside late last Friday. “She’s got legs” indeed for the session may have locked up the lows, at least on a short-term basis.
More Churning
Despite a round of better-than-expected economic news, stock market indices negatively reversed, from up to down, yesterday and ended with losses. Profit-taking due to the end of the month, the quarter, and fiscal year for some mutual funds combined with a failed intraday breakout after “resistance” stood its ground and an overbought situation [please refer to the chart titled: “Percentage of NYSE stocks above their 10 week (50-day) moving average”] helped aid yesterday’s negative reversal. After being up 115 points at the open, the DJIA ended lower by 47 points; the NASDAQ recorded a similar reversal and closed down eight points. The S&P 500 and the DJIA both enjoyed their best “September” since 1939, rallying 9% and 8%, respectively. The NASDAQ surged 12% last month.
What Sort Of Rebound in 2H11?
The recent data have been mixed, consistent with a slower rate of economic growth in the near term. The economy faced a number of headwinds in the first half of the year. Some of those headwinds are likely to be temporary. Others will linger. Growth should pick up in the second half of the year, but the pace seems unlikely to be especially strong
What To Watch For In Early 2011
One of the key themes for investors in early 2011 is likely to be a shifting economic picture. For the stock market, things tend to be all or none. That is, either the economy is booming or it’s falling apart – there’s not much ground in the middle. Investors seem to struggle with moderate and uneven economic growth. The tax cut package has taken the double-dip recession scenario off the table, but the data for the next few months are likely to be mixed, suggesting strong growth in one set of figures and more moderate growth in another. That back and forth should create some opportunities for investors.
The Job market, Oil Prices, and the Fed
On the surface, the February Employment Report was strong, but the details suggest more moderate improvement in the labor market. Still, new hiring is likely to pick up in the spring. Higher oil prices threaten the outlook for jobs and the overall economy. The Fed appears to be in a tough spot, but should keep monetary policy accommodative for some time.
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The new year began with some political drama, as last-minute negotiations attempted to avert sending the nation over the "fiscal cliff." Technically, we actually did go over the cliff, however briefly, as a host of tax provisions and automatic spending cuts took effect at the stroke of midnight on December 31, 2012.
Time Running Out for Large Gifts in 2012
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The "Fiscal Cliff"
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What Does the Supreme Court Ruling on the Health-Care Reform Law Mean for You?
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Europe and The Summer of Uncertainty
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Debt Story
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Feeling Better
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Fed Outlook – More Asset Purchases?
The Federal Open Market Committee, the Fed’s policymaking arm, will meet on November 2-3. Clearly, there are some differences of opinion among senior Fed officials regarding the appropriate path for monetary policy. However, the dissenters (those wanting to do less) are a small minority. The FOMC will come together with a somewhat less troublesome near-term economic outlook (no recession in the near term), but there are more concerns about growth in 2012.
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What Can The Fed Do?
Senior Fed officials meet next week amid what is widely seen as a slow patch in economic growth. A key question for investors, as well as for monetary policymakers, is whether this slowing will be temporary. Most likely, growth should pick up in the second half of the year. However, there are downside risks in the near term. Moreover, monetary policy appears to be handcuffed and fiscal policy is set to go in the wrong direction.
A Slow Patch
The recent economic data have been disappointing, but hardly a disaster. The broad range of indicators suggest a slowing in the pace of growth – not a contraction. One month does not a trend make, but the data have generated some anxieties about whether the current slow patch could be a lot longer lasting or turn into something more severe.
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Market Update
- 1. 6363 Woodway Dr Suite 870 Houston, TX 77057 Phone: 713-244-3030 Fax: 713-513-5669 Securities are offered through RAYMOND JAMES FINANCIAL SERVICES, INC. Member FINRA / SIPC Green Financial Group An Independent Firm Market Update June 16, 2011 The S&P 500 (SPX) gave back all of Tuesday’s gains – and then some – on Wednesday, dropping down to a new low for this correction, at 1265. S&P 500
- 2. This may mean that the downtrend is not quite finished, especially with a big retracement attractor target at SPX 1250 still looming just below. So if the SPX drops down to 1250 or so over the next few trading days, then the SPX will be in perfect position for a very strong rebound.