Has the Market Topping Process Ended?

With the action yesterday in stocks not seen since Primary Wave 1 down in March, for asset allocators it begs the above question. The top part of the below chart reflects the S&P 500 price pattern since before the March 23 market bottom. The bottom half of the chart illustrates the bear market rally and … Read more Has the Market Topping Process Ended?

Stocks Update 1a: On increased volume, prices are just shy of eliminating 2020 losses

Stocks are within approximately 1.5%-5.4% of eliminating 2020 losses. S&P 500 The S&P 500 index, the most prominent index in terms of volume representing 54% of total volume across the four indexes, is within just 3% of it’s February high on a net increase in volume of 66%. NASDAQ The NASDAQ is the second most … Read more Stocks Update 1a: On increased volume, prices are just shy of eliminating 2020 losses

Aggregate Demand & Back to Normal

One only needs to look at the trend in railroad traffic this year vs the trend in railroad stock prices to see that investors are defining a “return to normal” economic activity as the pre-recession level. However, utilizing a reasonable 2% economic growth pre-recession rate (since 2007, economic growth has barely averaged 2%) and current … Read more Aggregate Demand & Back to Normal

The effectiveness of investing when the “smart money” does

The terms “smart” and “dumb” to describe the times in which institutional professional asset managers are buying stocks vs when individual retail investors are buying is built on a historical pattern of the “smart” money buying when stocks are cheap vs buying at market tops when it’s a “dumb” time to be buying stocks. The … Read more The effectiveness of investing when the “smart money” does

Three salient facts about the jobs report which make it underwhelming

3% of unemployed workers mistakenly classified themselves on the BLS survey as “employed but absent from work due to “other reasons.” The BLS caught this and noted the unemployment rate is actually 16% (not 13%) with 25.3 million (instead of 20.5) out of work if you count these misclassified workers. The private sector added 3.1 … Read more Three salient facts about the jobs report which make it underwhelming

Stocks are at an optimal reversal level

Yesterday, the S&P 500 rallied to 3130.94, filling a March 4 gap and reaching the all-important .786 Fibonacci retracement level, a common reversal point for second wave trends. Fibonacci, the math behind of the Wave Principle, is used to define turning points. The essential Fibonacci ratios used in recognizing wave retracements are .236, .382, .500, … Read more Stocks are at an optimal reversal level

What the savings rate says about stocks

As stocks climb higher, extremes in underlying economic fundamentals reflect a galactic separation between the two. Personal consumption expenditure (PCE), fell to 0.5% year over year and 1.0% excluding food and energy while personal income rose by 30%. That difference sent the savings rate through the roof, up 33%. What if out of concern for … Read more What the savings rate says about stocks

It’s Time to Reconsider Whether Target-Date Funds are Viable

We know the industry’s design of target-date funds never considered major losses aka tail risk. However, tail risks at or around retirement can be detrimental to the participant’s retirement security. The following paragraphs detail why it’s time for the industry to take a hard look at their role as a steward for plan fiduciaries and … Read more It’s Time to Reconsider Whether Target-Date Funds are Viable