
Monthly Commentary

July 2010
Once again the
markets are waging a battle between the economic fundamentals and
the technical trends. On a technical basis, a variety of
widely-followed trendlines are suggesting the markets have some
short term strength. Over the last 4 days there have been several
attempts to break out above resistance levels. What is interesting
to note is the wide range in daily market moves. Typically in
strong markets these wide ranging daily levels are absent and fall
within a fairly narrow range. Toss in the increasing volume and
you have an interesting set of conditions that hopefully will soon
reveal their true intentions.
(read more)
June 2010
We are half way through 2010 and the story line remains the same.
Slow but steady economic growth spurred on by low interest rates
and government stimulus. Unfortunately, the most recent
performance in the US stock market would suggest that investors
remain skeptical of that premise. The 2nd quarter ended like many
quarters have with a late-day sell-off as buying interest waned
and investors sold underperforming stocks in the worst quarter
since the market meltdown triggered by the collapse of Lehman
Brothers.
(read more)
May 2010
Volatility in the
stock market seems to be abating and more analysts are stepping
out and saying this market is oversold. In the last 2 weeks
Goldman Sachs was encouraging investors to buy on dips and was
encouraging investors to stay in the market. Are we looking at an
over sold bounce in the market and a return to rising values as we
move through the summer?
(read more)
April 2010
We have a battle going on in the stock market and as always the
investors are the combatants. On one side there are those who are
fighting to drive the market down. This army is made up of
legions of fear mongers who point to structural problems within
the markets and the world’s economies. Greece’s economic woes
keep popping up as do the investigations into the trading habits
of Goldman Sachs. Soon the headlines will be dominated by the oil
spill in the Gulf and the inevitable comparisons to other recent
bio disasters. The markets have moved up steadily since January
and the pessimists say it is time to follow that sage advice
advising investors to “sell in May and go away.” Unfortunately
markets rarely fulfill investors expectations based on old wives
tales and well-worn phrases. More specifically analysts point to
three potential “derailers” that could jeopardize the global
economic recovery.
(read more)
March 2010
The resilience of
this market reminds me of the story about the “Little Engine That
Could” that I used to read to my kids when they were small.
For the past several weeks this market has been moving up in a
steady and consistent manner. Pullbacks have been few and
far between and unlike the little engine that used all of the
power that it had, this market has been moving up on very little
power as measured by trading volume. The lack of volume and
the accompanying conviction seems to reflect the general consensus
that this market is overbought, overvalued and ready for a
pullback.
(read more)
February 2010
"You can't describe
the economy as in a recovery until you have job growth," said
Charles Lieberman, chief investment officer of Advisors Capital
Management, LLC in Paramus, New Jersey. That statement will bear
out this week when we see the latest payroll jobs report on
Friday. The consensus forecast, according to economists polled by
Reuters, calls for a loss of 50,000 jobs in February, compared
with a decline of 20,000 in January. The U.S. unemployment rate is
forecast to rise to 9.8 percent in February from 9.7 percent in
January. Both productivity and earnings have been very strong and
at some point this will have to translate into earnings. You can
only expect workers to put in over time hours for so long before
their productivity begins to suffer and at that time, employers
will have to begin hiring. The Friday number should give us some
insight into that trend.
(read more)
January 2010
Coming out of the
worst recession in generations, the U.S. economy grew at the
fastest pace in six years during the fourth quarter of 2009, even
as consumer spending and business investment remained tepid,
according to data released Friday by the Commerce Department. Real
gross domestic product increased at a 5.7% seasonally adjusted
annual rate in the final three months of the year, the best
quarterly growth since late 2003, the government estimated. That
sounds like good news and the markets should have reacted
positively. The problem is that they didn’t and on Friday the
markets fell through critical support levels continuing a two day
long trend.
(read more)
December 2009
How could investors
be dissatisfied with the performance of the 2009 market? Going
back one year to the first trading day of January, how many of us
would have expected to see the upcoming year post gains in the
high 20’s? In a very unscientific poll of clients at the end of
last year, most of those I spoke with would have been very
satisfied with a return anywhere near 10% and would gladly have
settled for 6-7%. This of course was coming off the severe beating
dealt to the markets in October and November and after a brief
rise in January 2009, those hopes of positive returns all but
disappeared as the market hit 12 year lows just 2 months later.
Yet in spite of the dour business news and bleak economic
outlooks, the markets turned in their best performance since 2003.
Not too bad for minimal expectations. (read more)
November 2009
The remaining days
of 2009 should prove to be quite interesting. Historically
speaking December has been the best of the 12 months when it comes
to stock market performance. Based on 100 years of data the month
of December had gains in 71 of those months which was
significantly ahead of January and August’s positive numbers in
63% of the time. While history may provide a sense of comfort, it
often is of little value when looking ahead. (read more)
October 2009
A couple of positive
news items were rolled out to the public shortly before the end of
October. Earlier in the week we received news that the economy had
in fact expanded for the July – September period. The growth rate
of 3.5 percent GDP growth rate for that period represented the
first quarter of positive growth after four straight quarters of
declines. It was the largest gain in two years. But the concern is
that this growth will falter, given the huge problems still facing
households.
(read more)
September 2009
Here we are at the
end of the 3rd quarter and on the threshold of a new round of
earnings. The previous earnings season went pretty well, and
company share prices were largely gong up on lowered revenues and
lower expenses, but they did make money at a higher rate than the
previous quarter.
(read more)
August 2009
Market mood seems to be changing. Where
hope and optimism seemed commonplace a few months ago, investors
are now questioning the strength of this economy. No longer are
market drops being bought into as investors seek buying
opportunities. In fact the opposite is now happening: investors
continue to sell when good news comes forth.
(read more)
July 2009
The tug of war
between the bulls and the bears continued throughout the month of
July but based on the market results, the bulls continue to gain
ground on the bears. The DJIA was in fine summer condition putting
in the best July performance since 1989 and its best month since
2002. Earnings season is winding down with nearly 70% of companies
now having reported. On the surface the earnings looked pretty
good. 75% of the companies reporting surprised investors with
better than expected earnings and the average surprise was nearly
10% over estimates. The earnings were broad based with surprises
present in all major stock market sectors.
(read more)
June 2009
The month of June
ended in an uneventful manner as the S&P500 finished almost
exactly where it started on June 1. Trading volume this last
week was very light which reflected the general attitude of most
investors. Economic reports continue to indicate that we are
stagnate, but apparently some investors are buoyed by the sense
that the worst of the news is behind us.
(read more)
May 2009
While the popular
term around current economic discussions seems to be “green
shoots”, I am thinking of another, much older cliché: where’s the
beef? The “green shoots” reference is from Ben Bernanke’s comments
in mid-March during a 60 Minutes interview that he detected "green
shoots" of economic recovery, meaning that he was seeing slivers
of optimism and growth in various sectors of the economy. Since
then the economic and main stream press have picked up the concept
and are running with it. Just like the joy of those first green
shoots appearing in the garden after a long winter buoy our
optimism about the pending change in climate, so too are we
optimistic about the change in our economy when we see signs that
maybe the bad times are behind us.
(read more)
The "Markives"