Markets surged to end a rough second quarter with the S&P closing at its highs for the day. For the quarter, the S&P was down a little over 3% but it could have been much worse if not for today's rally. After drifting lower yesterday with the ObamaCare ruling and disappointing economic news, the market's surged in the last hour of trading as news of positive developments at the European Summit leaked out. The strength carried into today with the markets gapping up at the open and adding to their gains throughout the day. While the Europeans still have a host of issues to contend with, the Summit produced a level of cooperation and agreement not seen in several months and gave hope that the contending governments will work together to find solutions to the enormous issues that confront the region. Talk is cheap and now Europe will need to implement the agreements that were reached but there is room to be optimistic.
In the US, the S&P closed today at a couple of significant technical levels - the highs of 2 weeks ago and for those that are interested in Fibonacci numbers right at the 61.8% retracement level. Oftentimes, the markets strengthen at the end and beginning of months (particularly at quarter end), with money coming in from retirement plans and end of quarter window dressing from portfolio managers. We will be watching closely early next week to see if the market can follow through on today's gains. With the 4th of July falling in the middle of the week, trading will likely be skewed with many traders taking some time off. We are not ready to give the all clear but the skies are certainly a lot brighter today than they were last week. Hopefully there will be a little more clarity with the next issue of the BAM Market Wrap. We hope you have a wonderful 4th of July with friends and family. Stay cool...
Welcome to the extended version of the BAM Market Note. We are not bloggers by nature but have had clients and friends inquire about our thoughts on the market in between our newsletters. The number and content of posts will likely be determined by the conditions of the markets and the interests of our readers. We would greatly appreciate your feedback and comments.
Friday, June 29, 2012
Tuesday, June 26, 2012
TRADING RANGE BOUND
The market has been in a trading range over the last month. With 20 minutes left until the close today, the S&P is almost exactly where it was a month ago. Yesterday's losses nearly wiped out all of the market's June gains. The bulls needed a strong showing today and to this point they are getting a healthy rebound. We'll see if they can carry that momentum through the rest of the week. Volatility should continue as there will be lots of data points over the coming days. There are significant economic reports (durable goods, pending home sales, weekly jobless claims, revised GDP, personal
income and spending, Chicago PMI and Michigan sentiment) over the next 3 days as well as the Supreme Court's ruling on ObamaCare on Thursday. News out of Europe will continue to drive the US markets and the June 28-29 European Summit will surely create some increased nervousness. Germany has muted expectations of any new substantive initiatives, however, the tone of the meetings and any surprises will likely move the markets. It remains a very tenuous investing environment. We are content to be defensively positioned until we get a definitive breakout one way or the other. I will have much to write about in next week's newsletter!
income and spending, Chicago PMI and Michigan sentiment) over the next 3 days as well as the Supreme Court's ruling on ObamaCare on Thursday. News out of Europe will continue to drive the US markets and the June 28-29 European Summit will surely create some increased nervousness. Germany has muted expectations of any new substantive initiatives, however, the tone of the meetings and any surprises will likely move the markets. It remains a very tenuous investing environment. We are content to be defensively positioned until we get a definitive breakout one way or the other. I will have much to write about in next week's newsletter!
Sunday, June 24, 2012
Tuesday, June 19, 2012
Monday, June 11, 2012
PAIN IN SPAIN
What was supposed to be a boost to the markets instead resulted in a sell-off today. Over the weekend, the Eurozone agreed to lend Spanish banks up to $125 billion to curtail any runs on the banks. While the news was initially met with much excitement and higher stock prices, by the close of the markets most were flat to down. The US markets were among the biggest losers as the S&P shed 1.26%. After impressive gains last week, we are now in another dangerous position. The S&P gained nearly 4% last week to recover some of the losses over the last several weeks. However, as mentioned in our bi-monthly newsletter, a 3-4% bounce was to be expected and it would be what happens next that is important. We are now at that point. Will the markets continue the selling into tomorrow and through the week or will it bounce back and move back to recapture the technical damage done over the last two months?
Today was a very bad day for the bulls. With news to rally on, they failed to hold their ground. The selling also intensified near the close - never a good sign. If the bulls can't stave off the losses tomorrow, we are likely headed back to the lows of June 4th where there is a big line in the sand. If that level breaks, it could really get ugly. For now, we remain defensive and will wait to see how it plays out over the next few days or weeks. Investing is never easy but it is especially hard at juncture points like we are in now.
Today was a very bad day for the bulls. With news to rally on, they failed to hold their ground. The selling also intensified near the close - never a good sign. If the bulls can't stave off the losses tomorrow, we are likely headed back to the lows of June 4th where there is a big line in the sand. If that level breaks, it could really get ugly. For now, we remain defensive and will wait to see how it plays out over the next few days or weeks. Investing is never easy but it is especially hard at juncture points like we are in now.
Friday, June 1, 2012
JUNE SWOON
The sky is not falling but after a dismal May (S&P down 6.27%), the markets fell another 2.5% today due in large part to the dismal jobs report released this morning. Not only were the recent jobs created much less than expected, but prior month's gains were revised downward. The jobs picture combined with yesterday's dismal economic data was too much for the bulls to contend with and many hit the exits. All of the major indices closed at their lows for the day which bodes ill for the beginning of next week. The brief reprieve the markets experienced the last couple of weeks has quickly evaporated and the S&P has now pierced the all important 200 day moving average. The market has become oversold again on a short-term basis so the bulls will be trying to rally above the 200 day moving average next week. Rallying to the average will be one thing - holding it will be another as US economic news continues to disappoint and the issues across the pond show no sense of abating. The Fed and ECB still stand in the wings and many are thinking we are close to another round of quantitative easing (QE3). Absent a stark reversal in Europe and in the US economy, QE3 may be closer than we think and the only thing standing between another 5% loss in the markets. The next level of significant support for the S&P is around 1220 (60 points below where we closed today).
As mentioned yesterday and in our recent communications, our portfolios have been in defensive mode for several weeks. For the month of May, our portfolios were down anywhere from .5% to 1%. Though not all prices have been posted yet today, it appears that our Fidelity and TD Ameritrade accounts were flat to up fractionally today. Better times will come but, for now, extreme caution is in order. As always, please call Sam or I if you have any questions or would like to speak to us about managing your current investments.
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