Under Dow theory, we are not confirming a higher [continuing] bull market.
March 2, 2014
Those profits…from increased revenues from increased sales? Or, from cuts to employment and monetary inflation?
It is predominantly the latter. Therefore, virtually worthless. Yet, the market is at all time highs. Not on valuation, rather on QE and asset price inflation. The “inflation” is below 2% is a joke.
February 25, 2014
The S&P 500 broke out to a new all-time high today but didn’t manage to finish the day above its 1/15 all-time closing high. Nevertheless, the index is pretty much right back where it was on January 15th after experiencing a fall of nearly 6% and a subsequent rally of 6% in between.
Below is a look at sector performance during the market’s recent “round trip” since the close on 1/15. As shown, the overall market is flat with the S&P 500 down just 4 basis points, but there have been clear winners and losers underneath the surface. Interestingly, the two smallest sectors of the market — Telecom and Utilities — are on opposite ends of the chart, with Utilities up the most at 6.44% and Telecom down the most at -3.36%. Keep in mind, though, that the moves in these two sectors have very little impact on the S&P given their extremely low weightings in the index.
Of the sectors that do have an impact on the index as a whole, Health Care, Energy and Technology are higher now than they were on 1/15 when the market made its last closing high. Financials, Consumer Staples, Industrials and Consumer Discretionary, on the other hand, are all lower, and their underperformance is what has held the market back. These sectors have all bounced off of their early February lows, but they still haven’t gained back all of their losses from the 1/15 to 2/3 pullback. Now that we’re right back to prior highs, will the leaders (Health Care, Energy, Technology) continue to lead, or will investors move money out of recent winners and into the laggards?
As shown in the second chart below, breadth levels are elevated for the areas of the market that have outperformed, and they’re just above the 50/50 mark for the lagging sectors. If you’re looking to put money to work but don’t want to chase overbought names, there are plenty of stocks still trading just above their 50-days in cyclical sectors like Industrials, Financials and Consumer Discretionary.
February 24, 2014
The S&P 500 is currently trading above 1,850 and is now on pace to close at a new bull market high for the first time since mid-January. With that in mind, the tables below provide an update of where the current bull market stands in comparison to prior bull markets in terms of duration and magnitude. For the purposes of this analysis, we consider a bull market to be any period where the S&P 500 gains 20% or more (on a closing basis) without a decline of 20% in between.
In terms of duration, the current bull market still ranks at number seven on the list. With today’s new high, though, it is now less than a month away from taking out the 1982 – 1987 period as the sixth longest of all time. If the S&P 500 can hit a new high any time after 3/22, the next target will be the bull market of 2002 through 2007. In order to surpass that period and move into 5th place, the S&P 500 has to continue rallying through Memorial Day on 5/26. While the bull market has already been impressive, moving into the top spot for longest bull markets on record is still a ways off. In fact, the S&P 500 would have to go another 7+ years to 6/28/2021 in order to overtake the 1987-2000 bull market as the longest ever.