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Chart Of The Week

Oct 13 2023

One-Year Off The Low: A Muted Celebration

  • Oct 13, 2023

The bear-market low in the S&P 500 occurred one-year ago, yesterday. Whether that low remains intact during a potential recessionary down-leg is difficult to say, but the mere fact it’s survived for an entire year renders it significant.

Jun 16 2023

Market Odds For The Second Half

  • Jun 16, 2023

With the halfway point of 2023 two weeks away, the S&P 500 has broken out to a 12-month high. The index has accomplished that feat 32 times during the month of June—or exactly one-third of all cases measured back to 1928.

May 26 2023

What Is Narrower Than “Narrow”

  • May 26, 2023

The May Green Book, published a short three weeks ago, included an article titled “Market Narrowness in 2023” discussing the Big Tech theme’s market leadership this year.  We noted that 77% of the S&P 500’s year-to-date return through April 30th was produced by the nine S&P 500 members of the NYSE FANG+® Index, itself a collection of just ten large companies that dominate the Social/Cloud/Innovators cohort.  (As for which FANG+ company is not also in the S&P 500, that is your puzzle challenge for this long weekend.)

Apr 13 2023

Checking In On The Rally At The Six-Month Point

  • Apr 13, 2023

Yesterday was the six-month anniversary of the bear market low of 3,577.03 in the S&P 500. We think it’s unlikely the moderate upswing since then represents a new cyclical bull market. However, with the evidence still weighing in at Neutral, we’re not betting the farm on that opinion.

Mar 30 2023

What Does The Dow Have To Say About A “New Bull?”

  • Mar 30, 2023

Yesterday the NASDAQ 100 closed up more than 20% from its late-December low, prompting the media to enthuse that it had entered a “new bull market!” Sadly, though, the “NDX” has no company among the broad indexes: During this NASDAQ move, gains in the S&P 500 and Russell 2000 have been just 6.5% and 2.9%, respectively, while the DJIA is down 0.5%. (So much for January’s “breadth thrust!”)

Mar 10 2023

Small Caps: We’ve Seen This Setup B-Four

  • Mar 10, 2023

In mid-2020, we wrote that a new multi-year leadership cycle had probably begun. Technically, that belief hasn’t been disproven, but the extent of outperformance has been disappointing in the nearly three years since. 

Mar 03 2023

The Job Market Just Rescinded A Recession Signal

  • Mar 3, 2023

For those disappointed that February’s employment report won’t be released until March 10th, we have something to consider in the meantime.

 

Jan 20 2023

Fair Winds For Active Managers

  • Jan 20, 2023

The defining characteristic of last year’s bear market was the collapsing valuations of speculative growth stocks. A mania for themes such as cloud computing and disruptive innovation during 2016-2021 drove those names to fantastical valuations and bestowed market capitalizations of tens- and even hundreds of billions of dollars on such companies, many of which had yet to turn a profit.

Jan 13 2023

Is This Year’s Strong Start “Signal Or Noise?”

  • Jan 13, 2023

This year is off to a much stronger start than suggested by the 3-4% gains in the blue-chip averages: Through January 12th, the Value Line Arithmetic Composite—an equally-weighted index of about 1,700 stocks, was up 7.0%.

Dec 13 2022

Confidence & Causality

  • Dec 13, 2022

It will be years before policymakers know the long-term effects of the COVID experiment with Modern Monetary Theory. However, the episode has helped answer, once and for all, a question that’s troubled psychologists forever: Money can buy happiness! But it can’t buy hope.

Dec 01 2022

Jay Powell, The Chartist

  • Dec 1, 2022

When Jerome Powell took the reins of the Federal Reserve in early 2018, many commentators cheered the fact that he does not possess a Ph.D. in Economics. It will be many, many years before historians are able to conclude whether that’s a good or bad thing.

Yesterday’s action, though, left us wondering whether Powell might stealthily be in the process of earning a different designation—that of Chartered Market Technician (CMT). 

Nov 18 2022

How This Year’s Inflation Peak Differs From Its Predecessors

  • Nov 18, 2022

Our studies of economic and stock market history are meant to provide perspective, not an investment roadmap. But occasionally a current trend will resemble the past so closely it’s eerie.

Take the current inflation cycle. If (as we believe) June’s CPI inflation rate of 9.1% represents the peak for this business cycle, then many of its characteristics have lined up almost perfectly with the “average” of past inflationary episodes.

Oct 28 2022

Interrupting The Recession Debate With A Reminder Of How Hot The Economy Is

  • Oct 28, 2022

“Money illusion” continues to complicate analysis of the economy and financial markets. It might be a time when age and experience will actually prove helpful: Only investors who are 65 or older have experienced gaps between “nominal” and “real” data as wide as today’s.

 

Sep 30 2022

Time To Retire The Fed Model?

  • Sep 30, 2022

We’ve heard no references lately to the famous “Fed Model” for stock market valuation. We think we know why: The model’s usual proponents probably don’t like its current verdict—which is that stocks are far more expensive than at the early January market peak.

Sep 16 2022

Labor: Snatching Defeat From The Jaws Of Victory

  • Sep 16, 2022

This year it’s been popular to say the Fed will hike interest rates until it “breaks something.” Has that not already happened? Pull up charts of the Japanese yen, the British pound, and the euro, among others. And stateside, the Fed has broken one of economists’ favorite toys: the Phillips Curve.

Aug 19 2022

When There’s No Slack, It’s A Bad Time To Slack Off

  • Aug 19, 2022

The scene in our neighborhood in the last two summers has become one of relaxed and well-tanned professionals out in their yards overseeing home improvement and landscaping projects. No surprise: Not a single one has told us they’re less productive when working from home!

Aug 12 2022

Are You Better Off Than You Were Forty Years Ago?

  • Aug 12, 2022

Old timers will recognize our title as a twist on Ronald Reagan’s clincher in the final 1980 presidential debate with Jimmy Carter.

We recalled Reagan’s line while preparing for today’s 40th anniversary of the great 1982 secular stock-market low. Investors in the S&P 500 have earned an annualized total return of +12.4% since that trough, about two percentage points above the long-term average.

Jul 15 2022

Margin Pressure Under The Surface?

  • Jul 15, 2022

The spectacular economic rebound from the pandemic lockdown lifted corporate earnings to heights that are almost hard to fathom. That stupendous earnings run has been fueled by rising profit margins, which also reached record highs after the pandemic.

Jul 01 2022

How It Is, And Isn’t, Like Y2K

  • Jul 1, 2022

The 2022 economic backdrop is nothing like the near-Goldilocks environment accompanying the first few innings of the Y2K Tech bust. However, the action to-date in the former Growth stock leaders has followed the 2000-2002 path very closely—and almost on a point-for-point basis, when it comes to some  indexes. With the stock market “weight of the evidence” still negative, we wouldn’t be surprised if the Y2K analog holds for a while longer.

Jun 24 2022

If Inflation Has Peaked, Thank The Stock Market—Not The Fed

  • Jun 24, 2022

High inflation continues to dominate the headlines, but it is only one piece of the “weight of the evidence” that’s stacked against the stock market. Still, in ironic fashion, stock-market action itself suggests that inflation is set to peak.