Over my career, I have witnessed almost a dozen selloffs of 20% or more, which is about one every 3-4 years. Of these, the following are remembered: 1973-1974 Creation of OPEC and the first oil embargo Concern over inflation and the collapse of the Nifty Fifty 1979-1982 2nd OPEC crisis resulting from Iran/Iraq war The […]Read
Thoughts on the Market: May Edition
Equity markets posted a second consecutive month of gains in May. Volatility indicators calmed, providing some comfort to investors, and focus shifted to the re-opening of economies. Notably, most companies have reported financial results and were able to provide investors with some clarity regarding the depth and duration of the impact of the Coronavirus. With social distancing measures still in effect as economies re-open, businesses that can generate revenue in the face of depressed foot traffic, through delivery, click-and-collect or digital services, have grown their share of wallet to the detriment of those industries that have been affected to a greater extent.
Investors remain anxious, with many in denial of the market recovery. However, tangible data points are pointing to a solid change in both market and economic indicators. From a technical standpoint, more stocks in the S&P 500 are above their 50-day moving averages, a measure of relative short-term stock support, than at any other time in the last 20 years, with a reading of 95%.