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We Continue To Follow This Down Trend

CAMS Weekly View from the Corner – Week ending 5/17/2019

May 20, 2019

In early October of 2018 the stock market began what could easily be labeled as a cliff-dive after having put in a late summer uptrend that looked quite solid and healthy.  Seemingly, out of nowhere, the stock market went from looking excellent to looking terrible that finally let up with a Christmas time climactic low.

Said low then led to a tremendous upswing for the first quarter of 2019 whereby the collective seemingly felt the stock market was once again rock solid.

Three weeks ago said market quietly – very quietly – changed its stripes that have since led to a notable change in its upward behavior.

As we noted in our previous View, the S&P 500 has once again struggled to remain at levels attained back in early October of 2018.  In the previous week it has displayed more challenged behavior and has become more defensive.

Through it all – from the early October swoon to current day – we have chronicled with a curious “hmmm” if you will the Ten Year Treasury Bond and its consistent downward interest rate trend.

If you are a consistent longer-term reader of these Weekly Views you may recognize our chart below.

As this interest rate has continued to trend down we keep adding to our original text box narrative.  Today’s addition to this on-going narrative is yet another black line with accompanying text box whereby we ask is there a new low coming in this interest rate?

Click For Larger View:

The important take away from the behavior of the above chart is the fact that the very smart bond market continues to question the broad economic landscape.  Importantly, the world economy is generally soft with the U.S. leading in strength.

In sum, globally, we can say the global economic landscape is soft and with this the bond market continues to point this out with market participants continuing to push this interest rate lower.

The bottom line significance is if this makes a new low and trends lower will the stock market be able to hold itself together?

We have offered endlessly how our historically highly valued markets absolutely need on-going consistent economic growth to support them.  If the very smart bond market continues to send a concerning message with even lower interest rates in the above chart then stock market participants may, yet again, become very concerned about the economic backdrop.

We are watching all these market interactions as defensiveness continues to build across markets.

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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