record after record Archives - Ninth Inning Investments

What happens next is the question that just about everyone is asking now? After the onslaught of tariffs and executive orders, the markets have reacted accordingly. Heavy selling pressure has gone on since mid-February with a couple of strong bounces in between. Currently we find ourselves in yet another bounce back from the latest stock market selloff which occurred yesterday. For those who love volatility and trade around vol, you are having a field day, and this is your time. For those who have long term investments I think it is safe to say the last couple of months have been unnerving to say the least.

Over the past 25 plus years I have witnessed multiple markets and backdrops such as the one we have today however, those were for different reasons. The over exuberant dot-com bubble and the 2008 market crash when the banking system was on the brink of a total collapse. Today, we are not in this type of environment, but nonetheless, the tariff initiative needs to be monitored and managed properly so that we don’t fall into a scenario that would impact the markets long-term. I am hopeful that both sides in each tariff dynamic can come to a meeting of the minds.

As I look at the major averages I am seeing support in these selloffs, but I am also seeing resistance when stocks do bounce and try to restart an uptrend. I think we will be in this type of market for the foreseeable future whereas volatility will remain in play. For market vol to abate, the markets need to see how these tariffs will play out or if they will be adjusted so that agreements can be had. It appears adjustments will be happening.

The Dow Jones Industrial Average (see chart here) closed the month of April at 40,669, the S&P 500 (see chart here) closed at 5,569, the Nasdaq Composite (see chart here) 17,446 and the small-cap Russell 2000 (see chart here) finished the month of April at 1,964. Let’s not forget that the major averages have enjoyed record after record years before this disruption and quite honestly, weren’t we due for some kind of correction? Think about that and from my vantage point stocks and indexes are not acting too badly all things considered. Good luck to all 🙂

~George

The U.S. stock market notched record after record in 2021! What a year for all asset classes from stocks, to real estate, to the crypto markets!

The Dow Jones Industrial Average (see chart here) finished 2021 up 18.7%. The S&P 500 (see chart here) closed the year out up a whopping 27%. The Nasdaq Composite (see chart here) closed up 21.5% and the small-cap Russell 2000 (see chart here) closed 2021 up 13.7%. How counterintuitive are these results as our country and the world for that matter continues to face and deal with Covid-19. Covid is now entering its 3rd year with the latest variant taking the world by storm. The omicron variant are causing infection rates to soar. However, scientists are hopeful that this variant could be the catalyst to ending this pandemic due to how less virulent this variant is at least to the fully vaccinated. It’s still early but the way omicron has now seemingly and abruptly reversed its course in South Africa, there is hope that this will be the case everywhere else.

Back to the markets. As we enter 2022 the big question and maybe the only question the markets have is how aggressive will the Federal Reserve be in hiking interest rates. No question in the new year interest rates will begin to head north. Inflation is soaring and impacting almost everything, which is part of the reason why we are seeing all-time highs across the board. This is not sustainable and with interest rates on the verge of increasing, stocks will face their first true test as the tightening rolls out. That said and because the pandemic is still wreaking havoc, I do not expect the Fed will be too aggressive out of the gate.

Let’s look at the technical shape of the aforementioned indexes. The Dow Jones Industrial Average (see chart here) is comfortably trading above its 100 and 200-day moving averages as is the S&P 500 (see chart here) and the Nasdaq Composite (see chart here). The small-cap Russell 2000 (see chart below) is trading at it 100 and 200 day MA so let’s see if these support lines hold for the Russell. The other technical indicator that I prefer is the relative strength index aka the RSI and none of the aforementioned indexes are in overbought territory according to the RSI. The 70 value level of the RSI is considered overbought and the 30 value level is considered oversold and each index is trading right around the middle of that range.

Happy New Year!

~George

Record After Record! - Paula Mahfouz