This daily chart shows the 3 peaks and subsequent corrections in the SP 500 since late January ’18, and now with the SP 500 closing the week at a new all-time-high (ATH) (the May 3rd ATH was 2,945), a lot of people are wondering if this is a real breakout or if it’s just another head fake and we get another 5% – 10% correction in the next few weeks.
The G20 is a big deal this week – just as he did in early May ’19, with the SP 500 near 2,945, President Trump could send the Dow Jones down 300 with a “tweet storm” going full in with the full slate of tariffs.
The market probably expects President Trump to play hardball, thus the “upside surprise” for the market might be an extension, conciliation, or probably the best outcome, the Chinese to comply.
There is a lot of bad news in this market:
- Inverted yield curve and recession worries – hard to ignore this – it would help the Financial sector for sure, but a yield curve steepening and longer rates rising would help allay some of the recession worries;
- China and G20 – covered already;
- Global growth slowing – again, have to think this is already discounted in major sovereign indices
- Iran tensions
- Weak May ’19 payroll report, although admittedly over the last few years, the monthly jobs report (business survey) has been volatile.
Summary / conclusion: We get the G20 this week in Japan and then the June jobs report next week on Friday July 5th, which you would have to think would be a thin day for trade given the post-July 4th holiday is in full swing.
The poor sentiment and general malaise around the stock market, not to mention the strong performance of the credit markets this year results in client accounts being fully invested within normal asset allocations.
You have to wonder how many really horrid bear markets or severe corrections have started with bullish sentiment at 29.5%. (The above was cut-and-pasted from Bespoke Research.)