Weekly Market Summary

Summary:  SPX, NDX and COMPQ are now all at new all-time highs (ATH). The Russell 3000 and Wilshire 5000, which represent essentially all of US equities, are also at their prior highs. The trend remains higher. Moreover, strong starts to the year and multi-month gains have a very high propensity to lead to further gains in the months ahead and by year end. There are precedents for the index to top now, but those are the exception.

Sentiment has become more bullish. This can certainly mark a top, but the historical record is inconsistent. It's a warning, not a red light.

In the most important respects, breadth is fine.

On balance, all of this leans bullish, but it would be a mistake to assume the indices will just sail higher in the remainder of the year. That can happen, but most often a drawdown much more than the barely 2% seen so far in 2019 will occur, even after a start like the current year.

* * *

US equities continue to grind higher. SPX, NDX and COMPQ ended the week at new ATHs. They have risen in each of the first 4 months of the year. The leader is NDX, which has risen 18 of the last 19 weeks since Christmas Eve (table from alphatrends.net). Enlarge any chart by clicking on it.

April Macro Update: Employment and Housing Rebound

Summary: It's been a noisy few months for macro. The prolonged government shutdown in December significantly delayed many data reports. Into this mess, several reports were ugly:

Retail sales in December fell into yoy contraction for the first time since 2009. 

New employment in February fell to the lowest level since 2010. 

New home sales growth in November dropped 14% yoy, the lowest rate since 2011.

That weakness now looks anomalous: the data from the past month mostly point to positive growth. A recession starting in 2019 is unlikely.

The bond market sees continued growth. The yield curve has 'inverted' (10 year yields less than 2-year yields) ahead of every recession in the past 40 years (dots). The lag between inversion and the start of the next recession has been long: at least 7 months and in several instances as long as 2-3 years. On this basis, the current expansion will likely last through 2019 at a minimum (from JPM). Enlarge any image by clicking on it.

Weekly Market Summary

Summary:  NDX is now at a new all-time high (ATH). Leadership by NDX is a positive for SPX: historically, the risk/reward over the coming weeks and months for SPX has been excellent.

On an equal-weigh basis, both SPX and NDX are also at new ATHs.  Any weakness in breadth is almost exclusively explained by the healthcare sector. The other sectors, aside from utilities, have all reached new YTD highs in the past week.

Volatility has been unusually low so far this year. By one measure, this is one of the least volatile starts to a year in the past 90 years. That's unlikely to last. The largest reaction so far this year has barely been more than 2%. Going back 40 years, no year has seen a lower drawdown and all but two (95%) have seen a drawdown of at least 5%. With SPX now within 1% of its prior ATH, a meatier reaction is odds on in the weeks and months ahead.

* * *

US equities continues to grind higher. With about a week to go in April, SPX, NDX and DJIA are on pace to rise in each of the first 4 months of the year. The leader is NDX, which has risen 6 weeks in a row and 16 of the last 17 weeks since Christmas Eve (table from alphatrends.net). Enlarge any chart by clicking on it.

Advisors Perspectives: The Top 25 Venerated Voices for 1Q 2019

Many thanks to Advisor Perspectives for including the Fat Pitch in its list of the Top 25 Venerated Voices for 1Q 2019, placing ahead of much larger firms such as Invesco, Raymond James, BlackRock, Northern Trust, Pimco and AllianceBernstein. 

Advisor Perspectives’ website currently attracts over 150,000 unique visitors per month, virtually all of them financial advisors serving high- and ultra-high net worth individuals. The full list is here.

Weekly Market Summary

Summary:  SPX and NDX are now just 3-4% from their September all-time high (ATH). On an equal-weigh basis, NDX has already made a new ATH.

This has been one of the 10 best ever starts to a year; over the past 60 years, similar fast starts have consistently led to continued gains in the months ahead.  That doesn't mean stocks will not have an interim setback. But if past is prologue, SPX is likely to gain enough to make a new ATH in 2019.

Macro data weakened in the past half year. A conservative investor with a shorter time horizon wouldn't be wrong to reduce their equity holdings into strength. But the panic over weakening macro is likely to abate and, with fund managers' risk exposure falling to a 2-1/2 year low this month, sentiment supports a continued rise in equities.

* * *

Since Christmas Eve, SPX is up 21%, NDX 24% and RUT 23%. Europe and emerging markets are each up 14% (table from alphatrends.net). Enlarge any chart by clicking on it.