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Our Well Worn Chart Remains in Play

CAMS Weekly View from the Corner – Week ending 9/27/2019

September 30, 2019

We have offered the chart below of the S&P 500 in several Weekly Views over the previous year.  Our central observation has been and continues to be if we can see the stock market actually trend.

We have seen said market move violently in the previous two years but at the end of the day we have been trendless.

In chart analysis this is known as a range.  We continue to be stuck within a large range and with the behavior of the stock market recently it seems we may continue to be here near-term or longer.

Click For Larger View:

The above chart reflects two years of trading for the S&P 500.  The black horizontal line begins at the high mark attained in January 2018 which has turned out to be the end of the trending stock market experienced in 2017.

Since early 2018 the red lines depict our roller coaster experience.  We focus on the aforementioned black line because that is considered the “break out point” whereby if the stock market could eclipse it and continue to move higher a trend would be in place.

In recent weeks, yet again, the stock market has made an attempt to hold the black line and move higher but has ran into challenges near the previous high level.  Within the chart we have added the blue downward arrow with a curious question mark wondering if the black line will be in our near future once again.

In tidbit form here the current level of the S&P 500 is 3% higher than it was 20 months ago.  This speaks to the trendless market and through a percentage view offers how little progress the stock market has actually made once that high level mark was attained back in January of 2018.

Historically, this type of experience is not uncommon when we have a highly valued stock market (think getting ahead of itself if you will) while simultaneously experiencing an on-going positive economic backdrop.

A trendless experience with a positive economy acts as a large digestion process whereby valuation levels can become more reasonable.  With this can the current levels hold or will we be at risk of going to lower levels within the above range?

Low levels of the current range represent a significant drop.  To help us with this we stay focused on the black line for now.

The black line should hold after having worked around it several times in the life of the above chart.  If it were to fail then the stock market will be offering caution.  For now, via our question mark downward blue arrow – we watch closely to see if first it will test the black line once again.

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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