The S&P 500 has rebounded over 4% from its 2022 lows. But from a technical perspective, it is far too early to call the bottom. For this we need to see a huge improvement in the percentage of stocks trading above their 200-day averages. Unfortunately for investors seeking to call the bottom, that takes time. Price tends to run away from investors at a bottom, and often you will hear investors say that they will wait for the next pullback that never comes. The market does not let you in but rather just locks the door. News flow at the bottom tends to be terrible and those waiting for the all-clear sign on headlines will likely be disappointed as the market discounts better news in the future. Bad news is bought, which can be confusing to many – especially those that have not been through numerous bull/bear cycles. Generally, stock market lows are found when some type of bottom formation is seen, and the bullish breakout coincides with the break of the bear-market trendline. Quite simply, it’s a succession of higher highs and higher lows.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-07-04 12:52:562022-07-04 12:56:48Market Commentary July 2022
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-06-06 13:46:272022-06-06 13:48:23Market Commentary June 2022
After two years cooped up in their homes, consumers have been anxious to get back out and enjoy the travel and services they have been missing. In anticipation of a guest surge, airlines have added routes and flights, hotels have ramped up promotional packages, and restaurants have revitalised their menus for consumers anxious to put aside the home cooking. In a fully employed economy with rising wages, and with savings supplemented by past stimulus and reduced commuting costs, consumers should be more than ready to make up for missed time. But an unwelcome traveller, namely inflation, has booked passage. Many consumers are devoting much of their disposable income to food, fuel, and shelter, leaving scarce resources for discretionary goods and services such as travel and leisure.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-05-09 16:50:152022-05-09 16:51:27Market Commentary May 2022
April was a brutal month for the stock market, with blue-chips suffering their worst month since March 2020, while the Nasdaq had its worst month since October 2008 when the ‘great recession’ was taking hold. Purely from an investment perspective, the drop has had the benefit of washing away significant portions of the over-valuation in stocks that existed at year-end. Indeed, the combination of continued earnings strength and a correcting market have helped ease concerns about stock-market valuations. At some point, bulls will wade back into the carnage in search of favourable entry points for stocks that investors loved when they were pricey and hate now that they are cheap.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-04-04 11:33:282022-04-04 11:34:57Market Commentary April 2022
Investors study the yield curve for signs of pending economic softness; a key indicator is when short-term rates push above longer-term rates. That does not normally happen, given that investors expect to be paid a higher rate of return for committing money for a longer period. When rates push higher at the short end, that suggests that the long-term outlook is poor. Investors looking for recession indicators typically focus on the relation between yields on the two-year and 10-year Treasury notes, called the “two-10s spread.” This recently inverted. The last dozen times the two-10s spread inverted, the US subsequently experienced some degree of economic slowing, several times resulting in a recession.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-03-07 12:46:552022-03-07 12:48:19Market Commentary March 2022
With stock markets already on edge, thanks to ongoing inflationary pressures and the impact of rising interest rates, the war in Ukraine has sent the markets into freefall. Running away at the first sign of difficult times, however, is not a good move. Shares have historically delivered a better return than cash in the bank and they tend to recover quickly during times of turmoil. Even though remaining invested can be uncomfortable, it’s important for investors to hold their nerve and wait out the market volatility. Just ask those who sat tight through the Covid sell-off in February 2020, global financial crisis in 2008, and countless other black swan events. Investing is all about patience and eventually the rewards will come.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-02-07 15:51:092022-02-07 15:56:26Market Commentary February 2022
The City has no shortage of sayings. The one regarding the first month of the year is “As January goes, so goes the trading year”. Like most sayings, it was coined in a distant time when the stock market would be unrecognisable to most investors today. However, there is recent evidence to substantiate this claim. Good Januaries especially predict good stock years. For all years between 1984 and 2021, the FTSE 100 has finished the year higher 90% of the time when the market rose in January. In addition, Up Januaries are good for above-average returns. The FTSE 100 has averaged capital appreciation (before dividends) of 6.8%. In years in which both January and the full year were positive, the FTSE 100 saw average capital appreciation of 17.6%. The FTSE 100 rose 1.1% this January, a good sign for stock market investors.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2022-01-10 12:52:482022-01-10 12:54:04Market Commentary January 2022
We wish all our clients and readers a very Happy New Year. The year 2021 was a good one for stocks, fuelled by reopening optimism, strong corporate earnings growth, and medical breakthroughs. Much of the market’s momentum was recorded in the first half, before multiple challenges set in. These included inflation shocks beginning in late spring, a supply-chain crisis that impacted every industry by mid-summer, and rising interest rates as the year wound down. The year 2022 opens with many of these challenges still in place, and the stock market certainly faces a more-difficult path than was the case in 2021.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2021-12-06 12:39:282021-12-06 12:39:28Market Commentary December 2021
The coronavirus is nothing if not persistent. With Delta and overall cases seeming to have peaked, along came the Omicron variant to spoil our Christmas plans. The markets reacted predictably with government bond yields falling dramatically. Fortunately, the very preliminary news is that the symptoms of Omicron infection are no more severe than those produced by “regular” COVID-19. But many countries are already restricting international flights, and the fear is that Omicron will proliferate as people gather indoors in the cold winter months. The new variant could prove to be nothing out of the ordinary, or the trigger for another global economic shutdown. The reality is likely somewhere in the middle, as it often is.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2021-11-08 11:29:232021-11-08 12:02:37Market Commentary November 2021
Inflation remains the number-one topic in the stock market. Goods scarcity is impacting every industry, and the price of everything is higher. Yet despite this, corporate earnings remain solid. Earnings grew over 50% in Q1 and over 80% in Q2; the first-quarter comp was against a COVID-impacted Q1 2020, while the second quarter compared against the economic lockdown quarter of Q2 2020. The comp for the third quarter will not be as easy as the first-half 2020 comparisons. Nonetheless, earnings released so far are up more than 30% year-over-year and companies are beating expectations by a wider-than-average margin. That bodes well for supporting an already-high stock market valuation.
https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png 0 0 Mark Maloney https://www.gam.gi/wp-content/uploads/2019/06/gamlogo.png Mark Maloney2021-10-04 11:28:282021-10-04 11:29:13Market Commentary October 2021
September has presented the latest challenge to this bull market. The “September Effect”, as it is sometimes called, is often attributed to investors returning from holiday and starting to position for year-end. These investors may sell shares to lock in gains or capture tax losses to offset gains. Some may also be selling to acquire school gear for their children, which is not so much pens and notebooks these days but PCs and tablets. Why does this happen so often you may ask – if calendar events are so known, why are they not arbitraged away? It is because investor’s knowledge of past market patterns can make for self-fulfilling prophecies. This year, we view the September selling as a healthy and likely overdue shakeout of market excesses.