Displaying items by tag: S&P 500

(New York)

The Dow has not been doing so well lately. Last week it dropped to its lowest level of the year, declining further than in its worst bout of volatility in February. The reasons why are becoming harder to explain with every day of losses. While isolated flare ups used to be explained away, the situation is growing more complicated for investors. A growing risk of tech regulation, a looming trade war, higher interest rates—all are weighing on stocks. That makes the markets much more complicated and hazardous for investors, and it has become commensurately harder to make good decisions.

FINSUM: The market seems to be in a very treacherous period. Its failure to regain momentum after the fall in February seems ominous to us, and we do not see a clear end in sight.

(Frankfurt)

For investors looking for signs of bad things to come, this is a pretty strong one. US investors may need to focus overseas to see what’s coming, as Germany’s benchmark DAX index has just hit a “death cross”, or when the 50-day moving average falls below the 200-day moving average. This has only happened to the DAX four times in the last decade, and in all of the instances the market fell at least a further ten percent after the cross.

FINSUM: So the DAX is partly down because of the country’s exposure to a trade war, but it could be a first manifestation of what is to come for global markets.

(Washington)

Stocks may do well after the midterm elections, but Barron’s is arguing that rise will be preceded by a fall in share pricing leading into the elections. The contention is based on two arguments which rely on historical trends for the market. One is that markets do well in the third year of a presidential cycle, and the other is that stocks tend to do poorly in the summer. All of that points to a market that is likely to start rallying in the Autumn, specifically November 1st, says Barron’s.

FINSUM: While Barron’s does point it out, it is very worthwhile to bear in mind that these types of calls are only as good as the actual catalysts one sees that could really drive them. In this case, the uncertainty over how the Republican party will fair in the midterms may be a key factor.

(New York)

In a refreshing article given the relative doom and gloom over the last month, Barron’s has published a piece arguing that it is the bears, not the bulls, that need to be afraid of the equity market right now. The view is based on technical analysis. Many might be interested to learn that rather than the technical indicators showing a bull market at or near its peak, signs are suggesting a move upward may be in store. The piece is also quick to point out that despite the shallow correction a month ago, the bull trend for the market has continued unabated.

FINSUM: We don’t put a great deal of stock in technical analysis and only view it as useful as a companion to fundamental analysis. Nonetheless, it is good to stay abreast of this information.

(New York)

Anniversaries offer an opportunity to gain perspective on the market. This week is no different. The S&P 500 just had its nine-year anniversary from its bottom of 666.79 in March 2009. Along the way there have been somewhere around 32 “panic attacks” according to analysts. But despite these, the market is now trading above 2,700.

FINSUM: So the real question is whether that 4x+ rise should make one nervous a new downturn is on the way, or comfortable that we are on an upward trend.