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Can The Stock Market Actually Trend?

CAMS Weekly View from the Corner – Week ending 8/24/2018

August 27, 2018

As we enter the ninth month of year 2018 a question we have been focused on is can we begin to see the overall stock market actually put in an uptrend to round out the full year?

If you are having a passing realization that the stock market is positive for the year the very nature of our subject title may be confusing.

Interestingly, via the S&P 500 Index as our market gauge, the gains displayed thus far for 2018 occurred in the first month of the year.  The follow-on months went lower only to turn into a chop higher.  The process has been a bit of a wild ride.  Through it all we are finally attaining the high level point reached in January.


Click Here For Larger View:   http://schrts.co/wUCQvE

The above depicts the S&P 500 over the course of the previous fifteen months.  The horizontal red line denotes the high level mark attained in late January.  As the chart reflects, since late January the stock market has been filled with uncertainty in its behavior.

In recent weeks it has been able to trend higher rather than chop around with endless uncertainty.

With this, our central question leading into late summer has been whether the stock market can actually put in a trend to round out this full year.

The verdict is certainly out at this stage.  Interestingly though, we are seeing some early signs that the S&P 500 may be able to move into a higher point for the year.

There are some key components of the S&P 500 that have pushed into higher levels for the year.

This leadership – which is spreading in a positive manner – can be the early signs that point to market’s ability to do the same.

For now, our horizontal red line is the barrier that needs to be broken through in order to call this a trending upward market.  The next few weeks of behavior will be observation points which will help fully answer this important question:  Can we trend or will we continue to chop?

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Portfolio Manager, CAMS Spectrum Portfolio

Footnote:

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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