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49 Year Low?

CAMS Weekly View from the Corner – Week ending 1/25/2019

January 28, 2019

Every Thursday morning the U.S. Department of Labor (DOL) reports on the number of new claimants that have filed for State Unemployment Insurance.  This gives us a weekly view into the general story-line of the labor market, by state, via the compiled national report.

As a general rule the lower the number that are filing for new Unemployment Insurance the more stable/strong the general labor market.

This past Thursday the reported number came in at a 49 year low.  This speaks to the solid strength of the employment market and the economy at large.  In light of Martin Luther King holiday on Monday a few states estimated their total results so the actual number may be adjusted in the coming week.  Regardless, these weekly results continue to reflect a very solid employment market and continually post trend lows which is excellent.

Late in 2018 market participants seemingly became convinced the economic landscape was changing rapidly to the downside.  Forward looking measures thus far do not indicate weakness is coming as feared.  With this the stock market has risen rapidly off the late 2018 lows thus far in 2019.

Click for Larger View:

In late 2018 we had shared the above chart a few times in our Weekly Views.  It reflects the S&P 500 on a weekly basis dating back to early 2015 for perspective.  The red 50 week moving average line and the black horizontal line had been identified as important areas that we needed to see the S&P 500 stay above if the stock market were to remain healthy and constructive.

Both failed miserably to end the year with the growing fear of economic recession coming near-term.  As offered throughout that time as well as thus far in 2019; we have yet to see data supporting said fears.  Market participants seem to be rethinking their imminent recession fears and consequently have pushed the stock market straight up thus far in the New Year.

The question is can the stock market get back to a healthy looking chart as we move through the next several weeks?  If so the above lines should be pushed on through to the upside at a minimum.  Further out, the previous high level should then be attained.

Conversely, if the black and red lines continue to act as a hard ceiling whereby the S&P 500 price action cannot penetrate up through them then the market will be offering to us it has issues.  If this occurs and lasts for some time it may be offering to us that a bear market in stocks is in play.

As we stand now economic inputs continue to point to strength and the stock market is reacting positively.  The next few weeks will be giving us important information as to where collective market participants will want to take this market on a trend basis.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Portfolio Manager, CAMS Spectrum Portfolio


H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP).  This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”.  A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.

This commentary is presented only to provide perspectives on investment strategies and opportunities. The material contains opinions of the author, which are subject to markets change without notice. Statements concerning financial market trends are based on current market conditions which fluctuate. References to specific securities and issuers are for descriptive purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. There is no guarantee that any investment strategy will work under all market conditions. Each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. PERFORMANCE IS NOT GUARANTEED AND LOSSES CAN OCCUR WITH ANY INVESTMENT STRATEGY.

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