Market Sentiment Update
Sentiment dropped 2 points to 85 as the S&P 500 posted a gain of 1.4%. The small cap Russell 2000 advanced 1.9% and the NASDAQ gained 1.6%.
Markets have continued their steady advance of 2012. Eurozone leaders agreed to a yet another bailout deal for Greece over the weekend. The funding of Greece postpones one major threat to stability in Europe. The anticipation of this resolve has fueled the S&P 500 back to the highs of 2011. While the index levels are similar to May 2011, the economic environment continues to show signs of improvement in both employment and housing data. Since the BAMSI turned positive in November, the cyclical sectors have performed best with the financials and industrials posting the biggest gains. We remain invested in equities as the BAMSI is positive.
I will be on CNBC's Fast Money Half-Time show again tomorrow (Wednesday) at 12:00 pm Eastern / 9:00 am Pacific giving commentary on stocks and the market.
Market Sentiment Update
The BAMSI gained another 3 points on the week while the market was essentially flat on the week. The major indexes have gained nearly 10% since the BAMSI turned positive so while the rally may not be over, a pause here and there is natural.
Although risk still remains in the Euro zone, the market continues to show confidence and resilience. Yesterday's Moody's downgrade of Italy, Spain, and Portugal is a good example of this resilience as the market is showing relatively modest losses despite the bad news.
There are a few more weeks left in earnings season and the results so far have been quite good. Nearly 70% of S&P 500 companies that reported have beat analyst estimates. In fact, earnings have been so good that we are about to eclipse the 2007 earnings peak while the market still remains 11% below the 2007 highs.
Market Sentiment Update
Sentiment added another 5 points to 81 last week. The S&P 500 posted a tepid gain of 0.1% to complete four straight weeks of positive returns. The small cap Russell 2000 advanced 1.8% and the NASDAQ gained 1.1%.
As we mentioned last week, the Fed extended a plan to keep rates near zero until late 2014. This accommodative policy stoked inflation expectations and fueled a rally in gold which advanced 4.3% on the week. The yellow metal has now recovered December's losses and is now up over 11% in 2012. The materials and financial sectors are the top performers YTD.
The week ahead will be especially busy on the economic front with consumer confidence, manufacturing and employment reports. Meanwhile, Greece continues to attempt to define a deal with its creditors to avoid default.
We remain invested in equities as the BAMSI is positive.
Market Sentiment Update
Sentiment continued its 2012 advance to hit 76 last week as the S&P marched modest 2.0% higher. The NASDAQ advanced 2.8% and Russell 2000 climbed 2.7% as they continue to benefit from the desire for risk which is the consistent theme of 2012.
Today, the Fed met and issued a statement that they now plan to keep rates near zero until late 2014. This is an extension of previous statements that targeted low rates until mid 2013. Low growth and low inflation combine to fuel and enable this accommodative policy.
The fourth quarter earnings season is now underway with 25% of the S&P 500 reporting results. Expectations have come down in recent months such that 70% are posting positive surprises. This ratio is similar to previous quarters, but the reaction of the market to the negative earnings has generally been resilience. Initial declines on individual companies have often been met with buyers where historically a company would be punished for several days.
Apple continues to take over the world of phones and tablets reporting a remarkable 37 million iPhone units shipped in the fourth quarter last night. The company finished the quarter with over $97 billion in cash and investors are begging the company to pay a dividend.
We remain invested in equities as the BAMSI is positive.
Market Sentiment Update
Sentiment added another 6 points last week to hit 72 as the S&P 500 advanced 0.9% on the week. The NASDAQ and Russell 2000 posted gains of 1.4% and 1.9% respectively adding to gains after weakness in December.
While last week’s gains were small, they look especially strong when one considers the negative news during the week. Ratings cuts of sovereign debt in Europe and an earnings miss by JP Morgan were some of the negative stories to hit the wires. Just a couple months ago, these events would have been met with tremendous volatility but we have seen muted market moves in 2012.
The bulk of S&P 500 companies report earnings in the next two weeks which will continue to turn the focus to individual stocks. Early reports from the financial sector have been mixed at best with conservative guidance. However, reports from housing related companies have renewed hope for improved sales from the depressed 2011 levels. Therefore, housing stocks have started to show relative strength.
As the market remains positive, we continue to hold stocks. Should there be deterioration in market technicals, we will raise cash to protect against downside risk.
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If you understand that a 'football' is kicked and not thrown, and 'cricket' is not an insect, you might enjoy the insights into financial markets, modern culture, politics and sports from the perspective of an Englishman living in New York.