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Looking Past the Election

A look under the hood will show the BigFoot Database beginning to re-purchase into declining volatility and a possible break-out to the upside for the S&P 500.

Recall one of the big drivers of the BigFoot Algos is the presence of short-term volatility. When short-term volatility declines, it’s often a sign that markets are aligning for a positive advance.

Sure, the database is still pretty beat up, with approximately 46% of tracked symbols having buy signals. Still, this is up from the prior week’s 42% levels, showing signs the market is beginning to re-group at these levels in preparation for another move higher. It is the change in direction that raises the eyebrow…

How — or why — would this happen? Likely the markets are already looking past the election.

The headlines will suggest the market is banking on another round of stimulus from Washington. There’s also anticipation (or at least reporting) of a ‘blue wave’ ushering in both regime change in the white house and the Senate. If so, a round of government spending and higher corporate taxes is likely.

But it’s more complex than that. The markets aren’t tracking the headlines per se. In fact, headlines seem more inclined to sell an outcome than report the news these days. But the markets, ever single-mindedly seeking profits, are seeing the bigger picture for what it is: stimulus regardless of who is in the white house. So this is less a political prediction than a reality check. The Fed has suggested stimulus is required to keep the ship from capsizing. Now Washington is just jockeying for political points. If the market is correct, stimulus is a forgone conclusion. Now we’re arguing over when and how much.

So markets are less concerned in the short-term about Trump or Biden. They want to know when the money starts falling from the sky.

This doesn’t mean the markets don’t care who wins the election. It just means the markets aren’t looking out that far right now. “Free” money is a pretty powerful incentive to shorten time horizons. Longer-term the pace of growth for the markets will absolutely be impacted by one regime over another… but that requires too much thinking right now. We want to know where the next round of lighter fluid is coming from.

The technical picture suggests a break-out to all-time highs is possible this week. Futures are already indicating a higher open. And last week’s move in the SPX — while negative for the week — did little more damage than to allow some consolidation after the previous week’s break-out.

This isn’t to suggest a break-out to the upside is guaranteed this week. It’s simply to suggest that is what the pattern is indicating .

When looking at the numbers, the S&P 500 is now on the hunt to take out previous highs and extend toward the 3704 level. It seems unlikely to hit these levels this week – but perhaps in the next two weeks.

On the downside, look for 3440 or so for support. A breakdown below the lows of last week would signal a sideways move and would take the 3704 number off the table probably until after the election results are settled.

S&P 500 projections for the week of October 19, 2020

The wild thing about this market is it seems to have largely priced in the effects of Covid. It has more or less recoved its losses and moved back into the price channel established in 2019. We’ll see how the election plays out as to whether or not that longer-term pricing trajectory remains valid…

Updated 2020 Projections.
Note the S&P 500 has moved back into the original price trend channel.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Listen to the Market

Perhaps the biggest challenge of the day is separating fact from opinion. Indeed, most stock market analysis is just opinion. Sure, the fundamental data is real. Earnings are earnings. Projections are projections. So, numbers be numbers. But what does the data tell us? And how does it inform as to where the markets are headed?

In the midst of a highly divisive social climate, much of our news has been colored with editorial. The major media resources require eyeballs to sell to advertisers. That means ratings. And that means appealing to an audience. You get the idea.

So discerning what is going on in the investment markets can be tough.

Dollar weakening? Commodities rising? Yields dropping? Do we have inflation on the horizon? Will we see a wave of evictions as renters default on payments? Will the real estate markets collapse as mortgages go unpaid as a knock-on consequence? Heck, are there even any jobs for the middle class to earn enough to pay rent?

And how about stimulus? Unemployment? Government programs and government shut-downs? What is essential in our economy? What is essential to Washington DC?

True enough, these are compelling questions. And they do matter. Ultimately, the answers will sway economic outputs and valuations for investors.

But today? It’s still a lot of noise and conjecture.

So what do we know?

We know what the market is signaling. Behind all the editorial chaos, major indexes have been climbing higher.

On any given day, there are pull-backs. But overall, the trend across most types of assets (except energy recently) have been recovering over the past three months.

The concept is fairly straight-forward. If the markets are a voting mechanism, investors are still voting in its favor. Sure, there are some bigger winners or losers out there. But overall, the trend has been recovery.

This trend is difficult to find confidence in given the general media narrative and backdrop of a pandemic. But make no mistake, since the March lows, this market has experienced an exceptional recovery.

The year-to-date figures for the major indexes are uninspiring. But the recovery from the lows is a different story. How one frames the story is important.

So, knowing there has been significant recovery from the lows, what now?

(In my opinion) There has been an underlying theme to this market for the past several years. Lots of variables underlie this theme, but in its simplicity, it’s only two things: don’t fight the Fed, and TINA (there is no alternative).

The Fed, really since the Bernake administration, has been highly transparent in its communication efforts. In effect, it has demonstrated it will take extraordinary measures to maintain a stable currency and economy. And, since Washington has been largely ineffective for the better part of a decade, the Fed has stepped in with significant monetary policy to bridge the gaps.

The transparency has been useful for the stock markets. It has also contributed to the TINA situation, since the Fed has taken such remarkable steps to keep treasury yields low. Investors have been left with limited options to place risk capital and expect any kind of return.

What this has done is kept a bid under the markets for a long time.

Today, we’re seeing interesting shifts in market behavior. For one thing, there are now winners and losers. The pandemic has seen to that, as ‘non-essential’ industries have been hammered (or perhaps eliminated) by government shut-down.

Expect airlines, travel, hospitality, and many small businesses to take years (or perhaps never) to recover from the Covid shutdown.

Meanwhile, other companies have thrived. The ‘stay and home’ economy has gone bananas (a technical term). And the largest of tech companies have grown into trillion-dollar behemoths.

So why discuss this at all?

Because the mega-companies have become such massive influences on the indexes… and also on politics and culture. They have massive and incredible sway over how everything now operates.

Understanding this can help us understand the future of the markets. Microsoft, Google, Facebook, and the like do not require the consumer to walk into a store at all. So whether the economy shuts down or not, they survive. And they are all massive components in all the major indexes.

So, can markets keep going higher? Arguably, yes… despite the concept that we have major structural changes in our economy and many jobs are not only lost but gone.

Understand, bear markets are still possible. In fact, they’re probable. But it is also possible this market recovers and goes on to all-time highs (like the NASDAQ already has) before investors abandon some of the lofty names that have lifted the indexes in this recovery.

This is more of a mechanical issue than an economic issue. The money that is getting invested is likely going into these areas of the market.

At some point, valuations will be so stratospheric the bubble will burst… even for an Amazon or Tesla… but when is that day? You need go no further than the nearest financial media outlet to get opinions.

But what the markets are telling us today — from a technical perspective — is pretty straight-forward. Last week showed a possibility for correction. Instead, the markets has a weak break-out to the up-side. While we are over-bought by some measures, the trading pattern is indicating a move higher this week, with the possibility the S&P 500 will break above its all-time highs this week.

A close at new all-time highs will likely lead to further up-side from here.

For the upside, look for SPX 3400+ this week. For support, look at 3268.

Don’t get too invested in media headlines at this time. Until there is a material shift in information, the underlying thesis remains: the Fed is standing on the short end of the rate curve, and investors have nowhere else to go. That points to a higher stock market… (until it doesn’t, of course.)

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

 

Ready Q4

End of quarter rebalancing may generate some volatility today. Otherwise, markets look like they are staged to continue their sideways oscillation.

There is little technically to suggest there is a breakout in either direction. Instead, it seems the all-time highs of the SPX remain resistance, and the 100-day moving average remains as support.

The big-picture story appears little changed. The Fed is supporting the markets by maintaining low interest. Trade war headwinds are preventing the stock markets from climbing much higher. So we remain stuck in this sideways pattern.

Until something material changes, it appears there is little the market should expect in terms of a major move in either direction.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Thin Air

The SPX is in a difficult spot. On the one hand, momentum in the smaller-cap stocks looks questionable; prices are above monthly trend; and earnings season has many concerned growth may be waning.

On the other hand, the prior intra-day high of just over 2940 is within striking distance.

So which way does the market go?

This is a tough call given that things seem pretty fairly valued at these levels. If you’re looking for a clear catalyst that drives equities higher, we may not know it until after the market has already placed its bets.

Markets aren’t in the business of sitting around and waiting for all the data to materialize. Often times they place their bets. Last week may have been an indicator as prices climbed while volumes dwindled.

Futures have indicated a fairly mixed open.

The trick looking forward is that the technical signals are mixed. At this point, the SPX is sitting atop a trend looking for a direction. Do we break out higher or retrace?

A healthy move for this market (SPX) would be to pull back to the 2860/2800 level the reverse to push on to new highs. What appears more likely is a move to take out the 2940 highs, followed by an even tougher decision about whether or not things should move higher from there.

The air is getting pretty thin at these levels. Markets seem to have moved higher not because of the news but because of a lack of reason for the trend to break. This makes things more fragile. A negative announcement could trigger the next 10% pull-back. But that doesn’t seem to be the prerogative of the markets lately. Given the now tired adage of TINA (there is no alternative), it appears the probability the SPX crosses the 3000 level this calendar year is still pretty likely.

SPX for the week

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

No Foolin’

You can say what you want about the news tape. You can parse the economic data. You can look at the yield curve. And in spite of it all, the technical pattern is looking more and more like a re-test of the 2019 highs will be tested by the SPX.

SPX futures are indicating a spike higher at the open. This after the index has been consolidating around the 2800 level since late February.

Last week’s close above 2800, along with this morning’s futures pop, are a good indicator the that March 21 highs of the year will be tested (and likely surpassed) today.

If this occurs, it’s probable 2800 shifts from being the previous resistance level to the new support level. This gives the SPX the opportunity to push higher, re-testing last year’s highs, and possibly going even higher.

It would take a genuine shift in both economic data and policy to change the trend if this breakout occurs. For the time being, this can almost be called a stability bonus. Even though most media outlets like to stir the pot, the news narrative has not materially changed. And, more importantly, the FOMC rhetoric hasn’t changed.

This stability lends a degree of comfort for the markets. It’s possible we can see slight multiple expansion from these levels simply because, while negative, the current information cycle still indicates less ‘unknown,’ and therefore more risk can be priced higher.

Well, that, plus fixed income just has no meat left on the bone. So anyone looking for yield is forced into the deep end of the credit pool, or back into the stock markets. So the TINA market (there is no alternative) remains part of the story.

However you slice and dice it, the markets look to have a good shot at pushing higher over the next few weeks.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Market Macro Fails

For the first time since 2016 the BigFoot Market Macro Signal has gone negative. And we’re already set up for a potential whipsaw, as futures are pointing to a higher open that would put the SPX above the threshhold to flip the Macro back into buy territory.

Over the weekend the big announcement was a temporary truce between the US and China. The details are a little fuzzy, but basically, no new tariffs, and some rollbacks on a few – at least for the next 90 days.

This doesn’t mean the trade war is over. But it is positive progress. So we should be good to go, right?

Woah, woah… slow your roll. Just because we have a deferral of action doesn’t mean everything is okay. And technically, things are still unclear. In fact, if the futures pop higher today as expected, there’s good chance a pricing gap will materialize.

We’ve spoken many times on conference calls about how the markets abhor pricing gaps. And in this case, unless the market managed to push above 2825 or so, it’s likely we’ll dip back down to 2760 some time this week first to fill that price gap.

From a Macro perspective, we just want to see the markets finish the year above 2754. This should be enough to flip the signal back to a buy. Which is interesting, because last Friday’s close would have done it. But, alas, that’s not how the signal works.

We’re in a bit of technical no man’s land. There markets have had a double-dip this year, but the fundamental news is pretty optimistic. Jay Powell and the Fed gave the market the gift it was looking for (a more dovish stance), and Trump has softened on the trade war. Pricing multiples have fallen to essentially their low-point for the year. So there’s room for the markets to go up, but the mixed pricing signals also mean there’s room for the markets to dip a bit yet.

Given we’re already into December, and most of the earnings for the year area already over, it’s difficult to see a rationale for why the markets should push to all-time highs before the end of the year. In fact, given the mixed Macro signal from the software – and the anemic 40% long positions ratio – it’s difficult to see much more than a sideways market from here – even with the ‘big news’ about the deferral of the trade war with China.

Make no mistake, Monday is shaping up to a be a positive day for the markets, with the SPX likely to push above 2800 intra-day. But Monday may not be enough to shake off the bear-market chatter just yet… Tis the season for miracles, sure. And perhaps Santa is bringing more than coal for the year. But it doesn’t look like yuge breakout to finish the year at this point.

Interestingly enough, the ‘bear market’ may have already silently happened in the form of asset rotation. Many of the high-flying tech names have already had over 20% corrections in pricing. We just haven’t seen the entire market dip simultaneously. A move like that may be reserved for our next recessionary environment. When that actually occurs is still a subject of much debate.

For the week – enjoy the reprieve. Just don’t let a few days in the market head-fake you into thinking everything is all clear. Plenty of up days happen in bear markets. Better to keep your cool and play this one by the numbers IMO.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.

If You Ignore the News…

If you ignore the news, the technical picture for this market looks strong.  The past several weeks have seen volatility reign in, so the over-bought conditions are a lot less menacing than they were a few weeks back.  As of right now, traders seem content with 2900 has the support for the SPX.

With Canada making some last-minute concessions to save (most of) NAFTA, the markets also seem to be pleased.  Futures are higher.  Don’t look now, but the sideways pattern of the SPX may have just been broken.  If so, 2950 should be on the radar in the next week or so.

For the week, the first level of resistance is 2940 — next level is 2960.  Support continues to hang around the 2900 level.

We’re also at the start of Q4.  Many analysts have been raising expectations since Q1.  This may end up being a tailwind that makes for a pretty decent late-year push.  A 5-to-7% move higher from these levels is not out of the question for the quarter.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.

Get Back to Work

Vacation season is officially in the rear-view mirror.  Almost every school in the country is done with summer and back to the grind.  And the next break in the action won’t really occur until the Thanksgiving Holiday.  Look for volume to start climbing.

Let’s skip the fluff and get right to the chase:  the technicals are still showing bull signals at this time.  The media cycle is all aflutter about trade deals and the woes of the presidency.  Meanwhile, earnings are up, and interest rates are still tame.  This seems to be the only thing market participants care about right now.  Speculating on what out-there news story will take down Trump just hasn’t been profitable.

So what do the technicals tell us?  So far, the 2900 level is the next battle.  While markets closed at new highs, there may be some consolidation between 2870 and 2910 or so while participants settle into this new range.  Otherwise, the markets could shoot up toward the 2940 levels this week.

Over the weekend futures got as high as 2912.50 before pulling back to start this week.  The early indication is that the pull-back is likely to lead to an opening level similar to last Friday’s close.  It looks like the underlying momentum could turn positive though, pushing things higher.  If this market gets a little push, it could climb very quickly.

For the week, look for a positive bias.  It appears one of two likely options are in the set-up:  1) the market does some back-and-forth between 2870 and 2910,  or 2) the market finds its footing early and climbs passed 2925 while hunting for 2940 or so.  If option 2 happens, 2910 should become a new line of support for the week.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.

Breakout (Almost) Confirmed

Last week the SPX closed out the week at the highs for the year.  Good sign.  It’s tempting to call this a break-out situation.  And, in the simplest sense of the term, that’s true.  But we want to see some follow-through this week to see if upward momentum will continue and strengthen.  That’s the real test.

While the future is never be certain, this kind of break-out likely means the markets have higher to climb.

In the face of relatively manageable guidance from the FOMC, economic numbers remain solid, and the Fed is apparently going to remain measured and transparent enough to meet the market’s fickle expectations.  So the primary unknown now is trade.

China is the elephant in the room on this one.  It seems Europe, Mexico, and the like are all improving situations.  But China — that’s the interesting one.

As discussed on our forum calls, our belief is that the China trade concerns will resolve themselves in the near future.  But, of course, those are educated guesses.  We’ll see where things ultimately end up.

In the mean time, the all-time high close puts the 2900 mark on the radar for this week, with 3000 as the next line in the sand to pay attention to.  While unlikley, it’s possible the markets could test the 2900 level this week.

The other thing to note is where the markets close this week.  A close below the 2873 level isn’t necessarily a big problem.  But a weekly close below this level would mean the breakout is not yet confirmed.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.

S&P500 Eyes All-Time Highs

While it is difficult to forecast a breakout in stocks in advance, the S&P500 is less than one percent from closing above its all-time highs.  That can easily be taken out in a single day.  The question is which day?

Given the way data will be released this week — with the majority of market movers coming on Wednesday (with the release of FOMC minutes) or later, look for a trading range up until that point.  From Wednesday on, volatility may climb, but the probability of a close above the 2018 highs is climbing (despite mixed bag of global economic data).

The key thing to watch will be a weekly close above the January highs for the S&P500 — moreso than the DJIA or the NASDAQ (as they are either too concentrated in numbers or industries respectively).  A weekly close at all-time highs would be a strong signal the SPX is headed to the 3000 mark in the coming weeks.

There are a few simple things to keep in mind why this is happening:

  • Despite election discussions already starting, they’re a  ways off yet
  • The FED continues to operate with a lot of transparency
  • Corporate profits remain strong and growing overall
  • Interest rates remain low
  • Inflation remains relatively contained
  • Despite historically low unemployment rates, wage inflation has not gone bananas
  • Real estate has cooled slightly (which is probably okay as things were getting bubble-ish in many markets)
  • AND perhaps most important, TINA (There Istill No Alternative) that looks like a better place to get a return on your investment besides the stock market.

Any of these things starts to change and we can talk.  Until then, it looks like the market will keep doing what it’s doing.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
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