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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.

No Man’s Land

If you’re looking for some kind of directional indication from the short-term, the markets aren’t hearing it.

Since the Christmas Eve lows of last year, this market has been on a tear… until the last two weeks or so. Now it seems escape velocity is waning. Each time the SPX hits 2800 momentum seems to dry up.

After last week’s negative move the 200-day moving average is back on the menu. The question is, will it be support or resistance?

Given the earnings season is largely behind us, the markets now get to shift to economic reports and politics. But don’t be fooled – the real story remains the FOMC. As long as the cheap money remains in play, there’s little reason for investors to go elsewhere for returns.

Technical signals are pretty benign here. The upside momentum may be washing out, but there’s no significant downside to speak of yet either. This leaves us with a few key support levels in the short-term: 2742; 2722; and 2679.

To translate this into percentages, there’s about a 2.5% downside risk this week (according to technicals). There’s a similar amount of upside. Looks like we’re range-bound in the short-term until the market gets some news to confirm a directional break-out. So far, 2800 continues to be resistance.

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.



New Year’s Shift

Happy New Year!

This is the first full week of trading for the year – so back to work!

Markets are trying to shake off the December 2018 hangover. Last week’s first trading week sure made it interesting. The big news was the blowout jobs report last Friday coupled with the more Dovish tones from the Fed. This cocktail was the recipe for a huge rally on Friday.

Has this changed anything? Only the short-term outlook. It seems everyone had written off the economy for dead in December. With the Fed tightening, it was only a matter of time before the recession word came into play. But then the jobs numbers came out.

Realistically, the problems are unchanged from last year. The difference is outlook on the Fed. If the money supply isn’t going to be choked off even more aggressively (because, remember, they’re still reducing their balance sheet and no longer buying bonds), perhaps the economy can continue to grow.

Plus the American public is about to get a very real look at whether or not they will experience personal tax savings under this new plan. It’s been a popular target because of growing deficits at the Federal level, but folks are about to get a direct taste of ‘what’s in it for me.’

Some good news on China talks, the Federal government starts operating again (this is less of a concern to the market than the media would have you believe), and some decent earnings numbers and guidance in Q1 and this market could be back on track in short order.

The Fed shifts to more hawkish, trade talks with China drag on with no change, or we start to see numbers indicating an actual economic slowdown, and this market could head south all over again.

So for now, we wait a couple weeks and see how the data shapes up.

If you want to be a stickler, the SPX actually hit a 20% drop from peak-to-trough during December. So one could argue we’ve had the shortest bear market we’ve ever seen. Strangely, no one seems to be saying that. The talking heads keep talking about when the bull will die… so apparently an intra-day swing, or a one-day blip, isn’t how they want to measure things.

For the week, it look for 2408 support, and really no upside resistance to speak of, so 2575/2600. If this seems like a comically large range for a technical call… it is. But that’s what happens when you’ve had the kind of volatility that wrapped up last year. Things get blown-out, over-sold, and the algo’s get a little wild. Until volatility subsides (if), this may be typical for a while.

Cheers and fingers crossed for a great 2019!

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.

2018 Lows in Sight

Looks like the stock markets made Santa’s naughty list. Last week seemed like things were stabilizing until the Friday afternoon selloff threw that idea out the window. At this point, sentiment is shot. It’s the end of the year. And the Fed has backed itself into a corner – damned if it does, damned if it doesn’t. Because, despite decent earnings and decent economic data, the perception is the economy is rolling over.

So it looks like the lows of 2018 may be revisited soon. Friday’s price action already pulled the major indexes back into correction territory. There’s just very little traction to be had. And unless Jay Powell pulls a rabbit out of his hat, there seems to be little for the market to get excited about this year.

Short of a formally inked trade deal with China, it appears the high for the year was put in back in October. And it appears the low for the year may yet to be seen.

For the week, look for continued volatility as the market searches for a low around 2532 intra-day. If the SPX breach of this level and you have to start looking into 2017-year for support levels… we’ll cross that bridge if (or perhaps when) we get to it. Judging from the futures markets, Monday will open lower. If the Fed-speak is wrong though, a 60-ish point decline for the week is more than possible.

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
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.

 

Now the Stock Markets Can Start July

True, there was some pretty strong jobs data and a reassurance from the FOMC last week that rates aren’t going to go rocketing higher any time soon.  Still, the 4th of July holiday fell on a Wednesday, and Tuesday was a shortened day.  PLUS, it was the beginning of the 3rd quarter.  What does this all add up to?  Vacations – for lots of the major market players.  That’s why last week’s market movement needs to be taken with a grain of salt.

It’s not that the data didn’t matter.  It’s that fewer participants were around to adjust to it.  If the futures are any indicator though, folks liked what they saw last week.  The SPX is poised to move another third of a percent or so higher (if the futures are right).  And the technical pattern showed a pretty solid reversal at 50-day moving average (just above the 2700 support level).

In spite of all the tariff and trade war talk, the markets continue to produce strong earnings.  Even without multiple expansion this is a recipe for higher stock prices.  And that seems to be what’s in store right now.

For the week, look for 2800 to be the resistance area to watch on the SPX.  Or, more specifically, 2771 and 2788 as pit-stops on the climb to re-take 2800.  Regardless, the stage is set.  If this week can produce a climb higher, it’s likely the January highs will be soon to follow.  If for some reason the SPX manages to close below 2700, then we’re still stuck in the sideways trade (or worse) — but that seems like a low probability at this point.

As an aside, those who watch the DJIA as a key indicator may be disappointed for a time.  With the recent turnover in holdings — and the market’s infatuation with tech — this index has been in opposition to a lot of major market trends this year.  In the BigFoot database, it’s the only major index that has a wait signal associated with it.  Otherwise, most signals have re-entered the market.  So keep that little tid-bit in the back of your mind.  The non-financial mega-caps have not been the best performers of 2018.

As another aside, financials as a block have seem to struggle a lot recently as well.  This may be a key week for them, given that, as a sector, they’ve experienced a greater-than-10% correction for the year.  This could prove an interesting technical re-entry point (though don’t misconstrue this as a recommendation to buy – it’s merely a commentary that the sector may be nearing a technical low-point).

For the week, look for a positive bias to the SPX, with 2800 being the next major resistance area to test.

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.

Does this Week Even Count?

Because the 4th of July holiday falls on a Wednesday this week — and the 4th-of-July-Eve holiday apparently justifies a half-day for the markets on Tuesday — you can expect a couple things this week:

  • Volume will likely be lower than average
  • Volatility may be higher than average (on lower volume)

There’s actually a fair amount of economic data due to be released this week – including FOMC minutes.  So there markets will have some things to digest.  But many of the players will likely be out of the office until next week.  So, while it’s bold to say, it’s possible this week is kind of a throw-away.  It’s similar to the Christmas/New Year’s holidays in that many of the players have more-or-less positioned their books so they can be out of the office.

So don’t expect a breakout week.  Futures are indicating a lower open on Monday, with the 100-day-moving-average looking like the support level — right about 2700 for the S&P500.  If you’re looking for resistance, you’ll find the first major areas at 2750 and 2790.

Have a safe 4th of July — and remember:  no forum call this 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.

Mixed Signals Everywhere

With so many ‘this is good, but this is bad’ data points out there, it’s difficult to make heads or tails of this market.  Bull or bear?  Maybe the answer is neither… for now.

The interesting thing that’s been going on, really since Janet Yellen stepped down as FOMC chair, is that volatility — in general — spiked.

Intra-day volatility has remained pretty high.  But week-to-week, it seems like the swings are starting to normalize somewhat.  Could it be as simple as the markets getting used to Jerome Powell at the FOMC now — and realizing there has not been a significant policy shift nor a radical departure in communication style from the Fed?  And if so, is there really that much of a reason to expect the bears to drag this thing down much further?

If the market is primarily concerned with the cost of capital, it seems the corporate earnings picture is proving that the incremental rate hikes are yet to have a significant impact on things.  And the tax cuts are still just being realized in the system.  So…  geopolitics… which haven’t been a significant influencer of the markets (or even volatility for that matter) for the past several years, are all the sudden the big concern for the markets?  Don’t seem to jive with how the markets have behaved the last few years.

Seems more like the markets have to decide whether or not the ‘peak earnings’ theory throw out there by CAT is the real question.  And so far, the answer appears to be no.  So apparently it’s not what have you done for me lately, but what are you going to do for me next, that the market is looking for.

On last week’s conference call we discussed the pennant pattern the S&P500 has been forming through most of 2018.  This week the number to watch is 2688.  A close above this level for the week could be the start of a break-out that has this market re-test the 2018 highs published in January (fun stuff).  A close below the 200-day moving average (currently 2611, but call support 2600) would be a break-out to the other side, and signal a move lower.

We’ll see if this week signals a ‘sell in May and go away’ event, or if the old wive’s tales or the markets are nothing but baloney.  Have a great 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.

 

Watch the FOMC

Markets have been on a v-shaped recovery ever since the sell-off started a few weeks ago.  Since bottoming on February 9th there’s been an aggressive recovery.  But there’s also been an interesting shift in sentiment.  Has good news become bad news again?  (Meaning the markets think good economic data could force the Fed into raising interest rates?)

Wednesday will be the release of FOMC notes at 2pm Eastern.  That will be where we get a better sense of what’s going on.  Provided the message remains consistent — that the Fed isn’t going to pull the rug out from under anyone, and they’ll continue providing transparent forward guidance — everything should move forward business-as-usual.

For the week, 2800/2825 are the upside resistance areas, but a technical retest of 1700 appears likely, with a more extreme re-test of 2650 or so (the 200-day moving average).  A pull-back to these levels would not be viewed as a trend failure or recovery failure unless there is a shift in macro-economic data.

The BigFoot database has stabilized and macro’s remain long.  Expect some mid-day volatility on Wednesday as the market sorts out a direction.  This shortened week may end up being a decision point for whether or not this market can regroup and move higher.  Based on how the technical patterns have emerged so far, it appears the short-term damage is mostly done, and the longer-term bull market is resuming.

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.