Displaying items by tag: S&P 500

(New York)

Bank of America has just gone on the record warning investors of a pending S&P 500 meltdown. The bank runs a “Bull & Bear” indicator, and the measure has just reported the strongest sell signal since 2013. The bank says the rush into risk assets this year means a first quarter pullback in the S&P 500 is likely. Investors have been pouring money into stock funds this year, but the excitement has not helped bonds, as they have seen net outflows.

FINSUM: Take this indicator with a heavy grain of salt, since last time it signaled this strongly the stock market went on to gain more than 19% in the following year.

(New York)

Barron’s has been getting increasingly bearish of late (with the Dow at 25,000 now, we can understand why!), and they have published a bearish article laying out the case for why a correction is looming. The argument has a lot to do with price action, and what the market is showing is that despite reaching a new high, it is coasting rather than gaining momentum. The last trading day of the year—a 118-point loss—was a worrying sign of slowing momentum, and many technical indicators now point to falling prices soon.

FINSUM: One key takeaway from this piece is that despite January being considered a good month for stocks, that is not the case in midterm election years.

(New York)

The stock market just finished a sensational year, capping what seems a one-in-a-lifetime nine-year run. However, there is something very surprising about this rally that is different than those in the past—more and more Americans are sitting it out because of fear. Since the start of 2012, nearly a trillion Dollars has been pulled from retail equity mutual funds (some went back in as ETFs). The market rose 116% over the same period. In the last three years, US stock funds (ETFs included) have seen net outflows each year.

FINSUM: The Financial Crisis left deep scars for investors all across the country, and the traumatic effects of it can be seen in the data.

(New York)

Barron’s has put out a headline article by one of their most favored columnists, the well-known Byron Wien, which argues that stocks are in for a 10% correction this year. The argument is that the economy is going to keep doing well, which will lead to speculative buying getting out of hand. This, coupled with higher interest rates, will then cause a pullback of ten percent on the S&P 500 to around 2,300, but the market will rally strongly later, bringing it back to 3,000 for the end of the year.

FINSUM: This is a fairly complex call given the fall-then-rally argument. We overall don’t like this view, as we think if the market falls significantly, it might remain that way for several months.