Overview to Date Global Markets Primary Trends Performance chart of world markets Chart of China Large-Cap (FXI) Performance chart of major US market sectors Sector and Stock Highlight; S&P 500, Technology and Small-Cap Technology Risk-On assets vs. Risk-Off assets Summary 1. Overview to Date: Since the December 2018 lows, the S&P 500 rallied about 30%. […]
The S&P 500 made a new all-time high on July 26. Since July, the markets have moved into a period of consolidation. There have been sharp sell-off days with profit-taking and sector rotation by institutional investors. Since the September low, the markets have rallied through the July highs, and many markets are making new all-time highs. These new highs along with positive long, intermediate and short-term indicators are signaling and confirming a new rally, and the likely continuation of the long-term bull market started in 2009.
Since the September low, the markets have been building strength. On Friday many markets and indices made new all-time highs, or new recovery highs. The S&P 500 closed above its July high on good volume. The world markets as measured by FTSE All-World ex-US Index (VEU) made a new recovery high on good volume. The all-world index indicates a favorable expectation on world economies.
Since the December 2018 lows, the S&P 500 has rallied about 30%. The S&P 500 made a new all-time high on July 26. Since July, the markets have moved into a period of consolidation. There have been sharp sell-off days with profit-taking and sector rotation by institutional investors. Sell-offs have been followed by rallies. The rallies have been promising, but have not been strong enough to give clear correction over signals for the start of the next rally. Cash holdings by hedge-funds are the lowest in years, waiting on the sidelines for the next market leaders to move. Yet at the same time, some groups and stocks are making new highs. See the chart below in Section 6 for example. The Global Markets primary trend rankings are all green (see chart in section 2), indicating underlying strength in world markets.
Since the December 2018 lows, the S&P 500 has rallied about 30%. The S&P 500 made a new all-time high on July 26. Since July, the markets have moved into a consolidation pattern. There have been sharp sell-off days with profit-taking and sector rotation by institutional investors. Sell-offs have been followed by rallies. ….
The week started with a selloff on Monday and Tuesday. Concerns again over world economies, trade tensions, and how will the central banks respond to slowing economies. There were dovish comments from some US Federal Reserve members. It was after the restart of trade negotiations between China and the US, the markets rallied. Then a partial trade deal was announced, the S&P 500 gapped up, and Friday was a strong market up day.
Concerns over world economies, trade tensions, how will the central banks will respond, and even US politics once again rattled the markets. Tuesday and Wednesday the markets were down sharply on above-average volume. The selloff continued on Thursday but the markets turned around mid-day and finished the day up. The US markets were up strongly on Friday. The markets again showed how sensitive they are to ‘news’.
Over the last three weeks, there have been profit-taking in growth stocks and apparent movement into less risky assets. The S&P 500 has stalled below the July highs that may take more time before there is a clear breakout to new highs.
It was mixed to down for the week, pretty much directionless in many ways. There were concerns about the US Federal Reserve Wednesday meeting. The Fed lowered short-term rate by 25 basis points as expected. Then there were concerns about the Fed after meeting comments were not dovish enough about future rate cuts and that generated some adverse market action. There was an attack on the Saudi Arabian oil distribution, and oil popped up. Friday was quad witching which is the third Friday in March, June, September, and December (the last month of a quarter). Quad witching is when stock index futures, stock index options, individual stock options, and single stock futures expire simultaneously. Quad witching has generated some crazy end-of-the-week action, especially on Friday over the years. Sometimes just called wacky Friday. This Friday’s effect was negative on the markets.
Since the December 2018 lows the S&P 500 had rallied about 30%. The S&P 500 made a new all-time high on July 26. After the August correction, the S&P 500 has rallied just below its July all-time high.
On Monday it was almost like someone rang a bell. Institutional money moved from growth stocks and stocks that have performed well since January into value and small-cap stocks. With last year’s Q4 correction still fresh in institutional investor minds, it was time to lock in profits.