Rollin’, Rollin’, Rollin’
There’s a spring in stocks’ steps.
All of a sudden we’re talking about the best three-day run of the year so far for stocks, the best three days since November.The S&P 500 added 1.03 percent on Monday, extending a winning streak that started last Thursday and continued on Friday.
A negative April ended a stretch of consecutive positive months from November to March. But May is here to set things up and to the right again.
April was difficult. But we’d just notched back-to-back 10-percent-plus quarters for the S&P 500, and a 5 percent correction after a 27 percent rally from November through March is normal.
Investors looking to establish new longs certainly must see such price action as an opportunity.
I know traders and speculators do: Higher volatility, even springing from a low base, means more inefficiencies for disciplined short-termers with well-developed strategies to exploit.
The S&P 500 is now up 8.61 percent year to date, and 10 of 11 sectors were higher through the end of April. Energy, industrials, and financials led the way over the first four months of the year, taking over from “The Magnificent Seven.”
While people were pricing in first seven rate cuts and then one rate cut Federal Reserve Chair Jerome Powell was talking the entire time about being data dependent.
His words never changed. Investors’, traders’, and speculators’ expectations changed.
And you know what else? We’re in the middle of what’s shaping up to be the best earnings-reporting season in two years.
So, here’s the state of play, as of this very moment…
The major indexes continue to track the long-term trend. According to Detrick, this bull market is still pretty young too at just 18.7 months old and with a gain of just 43.4 percent against averages of 60.9 months and 167.3 percent.
The economy is fine, maybe a little hot on the inflation front but looking likely to settle down a bit there in coming months as shelter pressures ease and stable on the productivity front.
As Mish Schneider explains in her Weekly Market Outlook, her regular survey of the “Economic Modern Family” shows those indicators holding steady near critical technical levels.
And there’s optimism about the April jobs report signaling a rate cut, with the Fed already slowing the pace of its “quantitative tightening” program and the dollar selling off some. All of that, Mish notes, “is generally perceived as bullish.”
(And people are still crazy.)
