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.
Tuesday, December 18, 2012
Thursday, November 29, 2012
HELD HOSTAGE
For those of you unsure if the current fiscal cliff talks are having significant impact on the market gyrations from minute to minute, take a look at the chart below.
11:30
Speaker John Boehner began speaking at 11:30 EST this morning and had little good news with regard to ongoing discussions with the White House and Democratic leaders. After spiking up early in the day, the market fell off sharply with the Speaker's words. It seems that whenever politicians hold a press conference, the market hinges on perceived progress or roadblocks to a deal. The day is not over but what looked like another good rally today has turned decidedly more guarded with the news conference. We'll see if we get a Democratic response before market close that could change market sentiment. It is a dangerous market but one that has some positive underpinnings. If a deal is struck we could see a strong end of the year rally. However, if a stalemate continues the market will continue to bounce around based upon the news of the day. As we approach the end of the year without a deal, we could see significant selling as traders unwind trades amidst the uncertainty. Time will tell but making investment decisions based upon political posturing and rhetoric is a dangerous game. We will continue to maintain our somewhat conservative posturing until more clarity develops.
Speaker John Boehner began speaking at 11:30 EST this morning and had little good news with regard to ongoing discussions with the White House and Democratic leaders. After spiking up early in the day, the market fell off sharply with the Speaker's words. It seems that whenever politicians hold a press conference, the market hinges on perceived progress or roadblocks to a deal. The day is not over but what looked like another good rally today has turned decidedly more guarded with the news conference. We'll see if we get a Democratic response before market close that could change market sentiment. It is a dangerous market but one that has some positive underpinnings. If a deal is struck we could see a strong end of the year rally. However, if a stalemate continues the market will continue to bounce around based upon the news of the day. As we approach the end of the year without a deal, we could see significant selling as traders unwind trades amidst the uncertainty. Time will tell but making investment decisions based upon political posturing and rhetoric is a dangerous game. We will continue to maintain our somewhat conservative posturing until more clarity develops.
Wednesday, November 21, 2012
Thursday, November 8, 2012
STATUS QUO
After 18 months and over $2 billion dollars spent, the Presidential and Congressional races are over and we find ourselves mostly where we were politically after the mid-term elections. A Democratic Senate and White House and a Republican House. The fear with so many issues that need quick resolution is that more gridlock will rule the day and the US will head over the fiscal cliff in a little less than 2 months from now. Washington has much work to do. Let's hope that politicians of both stripes will get to the work of governing and leading and that solutions to these monumental issues can be settled in a bi-partisan and effective way.
The markets fell sharply yesterday for the greatest one day loss for the year. While there are a number of theories on what happened, the likely result is the combination of several reasons. It appears that Wall Street was expecting a Romney win and was surprised that President Obama was able to hold onto the White House. Additionally, Mario Draghi of the European Central Bank threw additional cold water on the markets with comments indicating that Germany is beginning to be severely hampered with the problems of the rest of the European Union. Germany has been the stalwart in Europe and if their economy stumbles it could accelerate the further demise of the rest of Europe. It is a tenuous situation at best. The result was a 2.5% loss for most all of the major indices. The Russell 2000, Nasdaq 100, and Dow all fell through the all-important 200 day moving average that often separates bull and bear markets. Fortunately, the S&P 500 fell just short of this demarcation line but is precariously perched just above the line. The bulls will need to make a stand here if there is hope that the markets can rally into year-end. The Dow and S&P also fell below important psychological levels as 13,000 and 1,400 were both lost in yesterday's decline. 1375 is the number to watch on the S&P as that is the last support level before a large gap in support. If 1375 is breached, it would bode much steeper losses over the near term. We'll have much more to say in our next newsletter.
Despite the heavy losses yesterday, our portfolios held up extremely well. Our conservative portfolios were mostly unchanged with a loss less than one tenth of one percent and our moderate and aggressive strategies fell a little less than four tenths of one percent. However, if the selling resumes, our portfolios will slowly deteriorate and we will need to make some adjustments. The market is due for a bounce so we will be watching closely to determine if the selling is over or just getting started. All hands are on deck.
The markets fell sharply yesterday for the greatest one day loss for the year. While there are a number of theories on what happened, the likely result is the combination of several reasons. It appears that Wall Street was expecting a Romney win and was surprised that President Obama was able to hold onto the White House. Additionally, Mario Draghi of the European Central Bank threw additional cold water on the markets with comments indicating that Germany is beginning to be severely hampered with the problems of the rest of the European Union. Germany has been the stalwart in Europe and if their economy stumbles it could accelerate the further demise of the rest of Europe. It is a tenuous situation at best. The result was a 2.5% loss for most all of the major indices. The Russell 2000, Nasdaq 100, and Dow all fell through the all-important 200 day moving average that often separates bull and bear markets. Fortunately, the S&P 500 fell just short of this demarcation line but is precariously perched just above the line. The bulls will need to make a stand here if there is hope that the markets can rally into year-end. The Dow and S&P also fell below important psychological levels as 13,000 and 1,400 were both lost in yesterday's decline. 1375 is the number to watch on the S&P as that is the last support level before a large gap in support. If 1375 is breached, it would bode much steeper losses over the near term. We'll have much more to say in our next newsletter.
Despite the heavy losses yesterday, our portfolios held up extremely well. Our conservative portfolios were mostly unchanged with a loss less than one tenth of one percent and our moderate and aggressive strategies fell a little less than four tenths of one percent. However, if the selling resumes, our portfolios will slowly deteriorate and we will need to make some adjustments. The market is due for a bounce so we will be watching closely to determine if the selling is over or just getting started. All hands are on deck.
Wednesday, October 31, 2012
Friday, October 19, 2012
A LONG TIME PERSPECTIVE
Where we have been and where we are. Note that the S&P is still below its highs of 2000 (over 12 years ago) and its 2007 highs (5 years ago).
Today's weakness is due to several lackluster earnings reports (Google, GE and Microsoft among others). We'll see how deep the correction goes but we suspect we will see the recent lows around 1425 on the S&P before we get back to the recent highs.
Today's weakness is due to several lackluster earnings reports (Google, GE and Microsoft among others). We'll see how deep the correction goes but we suspect we will see the recent lows around 1425 on the S&P before we get back to the recent highs.
Tuesday, October 16, 2012
IT'S ALL ABOUT EARNINGS
After a month of consolidation and a slight correction, the markets are looking at earnings season to determine where it heads next. Earnings reports have started in earnest today and will continue throughout this week with 79 companies of the S&P 500 and 12 of the Dow 30 reporting. This is one of the peak weeks and will drive the near term direction of the market. To this early point, earnings have been inline with expectations and the market has responded with a positive yesterday and a good start to today. The S&P pierced its 20 day moving average last week but looks to bounce back above with a strong showing today. Key levels to watch for the S&P are 1419-1425 on the downside and 1465 on the upside. A break below 1419 would likely lead to a much deeper decline back into the 1300s while a break to the upside would bring into focus the 2007 S&P high of 1565.
From a technical perspective, the recent action has been constructive. A period of decline and consolidation within an uptrend provides the market an opportunity to rest and allow those sellers an opportunity to sell in an orderly fashion. The market is set up for another move higher if earnings can deliver. There are many wildcards (aren't there always!) with the economy, fiscal cliff, election, Europe, etc... The usual culprits but, nevertheless, things that could provide significant road bumps on the way to reaching the highs experienced over 5 years ago. There remains much to keep us up at night but the market's resilience (not to mention the Fed intervention) has the market poised for more gains in the coming weeks. We would not be surprised to see a little more weakness over the next few weeks before the market makes another charge into the end of the year. As always, we are watching things closely and making portfolio changes as market conditions warrant.
From a technical perspective, the recent action has been constructive. A period of decline and consolidation within an uptrend provides the market an opportunity to rest and allow those sellers an opportunity to sell in an orderly fashion. The market is set up for another move higher if earnings can deliver. There are many wildcards (aren't there always!) with the economy, fiscal cliff, election, Europe, etc... The usual culprits but, nevertheless, things that could provide significant road bumps on the way to reaching the highs experienced over 5 years ago. There remains much to keep us up at night but the market's resilience (not to mention the Fed intervention) has the market poised for more gains in the coming weeks. We would not be surprised to see a little more weakness over the next few weeks before the market makes another charge into the end of the year. As always, we are watching things closely and making portfolio changes as market conditions warrant.
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