Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: S&P 500 Index

Empire State Survey: Manufacturing Optimism “Tumbles”

This article appeared online at TheNewAmerican.com on Wednesday, April 18, 2018: 

It wasn’t the headline from the Empire State Manufacturing Survey released on Monday that rattled investors, although it was bad enough: “The general business conditions [the current conditions] index, at 15.8, remained firmly in positive territory [anything above zero is a positive], although its seven-point decline from its March level pointed to a somewhat slower pace of growth.” (Emphasis added.) In March that current conditions index was at 22.5, having come off a previous high in October of almost 30.

It was what followed that rattled more than a few investors seeking cracks in the façade of the Goldilocks economy:

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The Best Stock Investment Tip Ever Given

This article was published by The McAlvany Intelligence Advisor on Wednesday, April 4, 2018:

Sean Williams, writing for The Motley Fool newsletter, has given his readers what he calls “the closest thing you’ll ever get to a surefire stock tip”:

Since January 1, 1950, the S&P 500 has undergone 35 corrections whereby its aggregate point value has fallen by at least 10 percent….

 

Here’s the key point: all 35 of those stock market corrections have been completely erased within a matter of weeks or months (and in rare cases years), by a bull market rally.

 

I repeat, in 35 out of 35 instances since 1950, the S&P 500 has erased any stock market corrections totaling 10 percent or higher at some point in the future.

 

That’s a 100 percent success rate over nearly three dozen data points.

 

Buying any major dip in the S&P 500 is about as close to a guarantee as you’re going to get when it comes to investing in the stock market.

An investment advisor in Colorado Springs requires that his clients promise not to turn on CNBC during the day, but instead concentrate on living life. As a result, he says, he almost never gets a call during market downturns because his clients are focused on more important things.

Other investors, however, are no doubt calling their brokers following the news that the nine-quarter winning streak in stocks came to an ignominious end in March, with the Dow losing 616 points during the first quarter of the year.

It is helpful to remember at least two things:

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Bull Market in Stocks Continues

This article appeared online at TheNewAmerican.com on Tuesday, April 3, 2018:

The 616-point decline in the Dow Jones Industrial Average (DJIA) during the first calendar quarter of 2018 ended a nine-quarter streak of gains. During those nine quarters, the Dow rose an astonishing 8,400 points, almost half of the Dow’s 18,000-point gain since the start of the bull market in stocks in 2009.

Monday’s sharp decline of more than 600 points mid-day (the Dow ended down 450 points for the day) raised once again the question: is the bull market in stocks over?

It’s highly unlikely. From 1995 to 1997, the Dow rose 11 quarters in a row before selling off. After the down quarter that followed, the market roared back, gaining 11 percent the next quarter and climbing more than 45 percent by the end of 1999.

Yardeni Research reports that

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Bull Market in Stocks Remains in Place: Dow Theory

This article appeared online at TheNewAmerican.com on Friday, March 23, 2018:

Thursday’s selloff on Wall Street pushed the S&P 500 Index (which tracks the price performance of the stocks of 500 of America’s largest companies) into negative territory. All four of the widely-watched indexes — the Dow Jones Industrial Average (DJIA), the S&P 500 Index (SPX), the Nasdaq Composite Index (COMP), and the Russell 2000 Index (RUT) — dropped the most on Thursday since February 8.

Dow Theory followers were more focused on the Dow Jones Transportation Average (DJT), as it came perilously close to triggering the last of three indicators needed to declare that the Bull Market in stocks is over.

Ironically, the Dow Theory, developed by Charles Dow, the founder and first editor of the Wall Street Journal and co-founder of Dow Jones and Company, was never used by him to trade stocks. But followers of his theory are legion, which could spell trouble

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313,000 New Jobs in February, Far Exceeding Expectations

This article appeared online at TheNewAmerican.com on Friday, March 9, 2018: 

Friday’s numbers from the Bureau of Labor Statistics (BLS) were predicted a day earlier by ADP/Moody’s Analytics, which said that private payrolls in February jumped by 235,000. But few expected the BLS to report what one surprised forecaster called “unbelievably strong” new jobs numbers. Further, the Labor Department said that its jobs reports for December and January understated the reality, adjusting those two months’ reports upward by another 54,000 jobs.

The economy continues to gain strength.

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Despite Stock Sell-off, Few See Recession

This article appeared online at TheNewAmerican.com on Friday, February 9, 2018: 

Barbara Friedberg must be feeling pretty good right about now. Last October she made “10 Bold Stock Market Predictions for 2018,” and already she is scoring five out of 10:

Value stocks will triumph;

Cash will be king;

Inflation will inch up;

Market volatility will return; and

Bonds will offer higher yields.

The jury is still out on her prediction that “the Bull Market [in stocks] will end in 2018.”

Friedberg is no lightweight. She is a former portfolio manager and has taught finance and investments at several universities. She authored a popular book in 2014, How to Get Rich Without Winning the Lottery.

Despite the mantra that stocks’ performance is often a harbinger for future economic performance, few at present agree with her about the bull market in stocks being over.

The sell-off (which appears to be continuing as this is being written) in stocks is impressive. The Dow Jones Industrial Average (DJIA, or The Dow) has lost 3,227 points since its high on January 26, or 12 percent, while the S&P 500 Index (SPX) has dropped by 290 points, or 10 percent, since then as well. This is into “correction” territory and should be drawing negative outlooks on the future of the U.S. economy from every quarter.

But they can’t be found. Aside from perma-bears Michael Snyder and David Stockman, few of the usual suspects can be found who agree with Friedberg. When the Wall Street Journal polled its economists, they remained adamant about the health of the economy: GDP will continue to grow and unemployment will continue to drop:

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Markets Move Higher Following Crash Instigated by Obscure Agency

This article appeared online at TheNewAmerican.com on Wednesday, February 7, 2018: 

English: Logo of The Goldman Sachs Group, Inc....

With Wall Street regaining its footing following the decline that started last Thursday, commentators in the mainstream media are still searching for the decline’s cause. Initially they claimed that it was an unexpected surge in inflation evidenced by the rise in the yield of 10-year U.S. Treasury notes approaching three percent (in early September it was closer to two percent). This was followed by the jobs report that announced that wages increased 2.9 percent year-over-year, up from just over two percent previously.

Writers at the Wall Street Journal dug deeper: The selloff was caused by — ready? — “volatility sellers, risk-party funds and algorithmic trading.” They then went into mind-numbing detail about how these strategies work and how the crash cost people using in them in excess of $200 billion.

Peter Schiff, CEO of Euro Pacific Capital, told TheStreet.com that maybe it was the Federal Reserve’s unhappiness with The Donald:

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Americans Expect Booming Economy to Continue, Says Conference Board

This article appeared online at TheNewAmerican.com on Wednesday, January 31, 2018: 

The Conference Board’s January survey of consumer confidence came in at 125.4, beating December’s number and outperforming predictions of economic forecasters. Additionally, December’s number had to be revised upward as the original index of 122.1 understated consumer confidence that month as well.

As a measure of the strength of the economy, the Conference Board, which has been conducting similar surveys since it was founded in 1916, established its “baseline” for its consumer confidence index at 100 in 1985. Put another way,

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Tax-Reform Ripple Effect: Hundreds of Companies Recalibrating, Raising Employee Benefits, Investing in New Projects

This article appeared online at TheNewAmerican.com on Friday, January 26, 2018: 

Workers at Camp Construction, the construction giant headquartered in Houston with sites all across the southern United States, received a note along with their last paycheck. Signed by the company’s president, Roger Camp, it read:

Because of the reduction in corporate taxes we, as will all businesses, benefit from this tax cut. We believe that YOU are the reason for our success. And now that we will be giving less of our hard earned income to the federal government, we can share some of it with you.

 

Please look for a $500 tax cut bonus in your next payroll run.

There are now more than 240 companies who are doing the same for their employees. At current count this will brighten the paydays of more than three million workers.

And the ripple effect of the tax reform law is just starting to be felt.

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Dow Smashes Through 25,000; to Smash Dems in November?

This article appeared online at TheNewAmerican.com on Thursday, January 4, 2018:

The surprising thing about the Dow’s volcanic eruption through the 25,000 level on Thursday is that it was matched by all-time highs in other key stock market indexes such as the S&P 500 Index, the NASDAQ, and the Russell 2000. Even more surprising is that this isn’t happening in an American vacuum: Japan’s Nikkei Stock Average hit a new 26-year high, rising above 23,000 for the first time since January 1992. The Hang Seng (Hong Kong) Index just touched a new 10-year high, while major stock market indexes in New Zealand, the Philippines, and Thailand also set new records on Thursday.

The reasons why aren’t surprising:

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The U.S. Economy is Built on Papier-mâché and Politicians’ Promises

This article was published by The McAlvany Intelligence Advisor on Wednesday, November 1, 2017:

What a perfect definition of the American economy! Papier-mâché is defined as a “composite material consisting of paper pieces of pulp, sometimes reinforced with textiles, bound with an adhesive such as glue, starch, or wallpaper paste.” Add in a dose of political promises that everyone knows cannot be kept – not even close – and we have the American economy.

From a distance it looks pretty good. More than pretty good: to the untrained eye the American economy is setting world records, to wit:

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U.S. Economy Continues to Surprise to the Upside

This article appeared online at TheNewAmerican.com on Tuesday, October 31, 2017: 

One measure of how the U.S. economy continues to exceed expectations is the Economic Surprise Index published by Citigroup. It’s a tool that is used to measure how the economy compares to those expectations and, at the moment at least, it reflects the ebullience reported elsewhere. Any reading above zero indicates that the economy’s performance is exceeding projections. On Tuesday it hit 40 — its highest level since April.

That performance has repeatedly been reported in The New American and elsewhere, with these notable results:

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Dow Crosses 23,000 for the First Time in History

Performance of the Dow Jones Industrial Index ...

Performance of the Dow Jones Industrial Index during Black Monday

This article appeared online at TheNewAmerican.com on Tuesday, October 17, 2017:

The Dow Jones Industrial Average (DJIA), colloquially called “The Dow,” crossed over the 23,000 benchmark level early Tuesday morning for the first time in history. The Dow, which tracks the stocks of 30 major corporations, has gained 25 percent since the election while the NASDAQ (which tracks the stock performance of a vastly larger and more diversified range of companies across the globe) is up 27 percent. The S&P 500 Index (which tracks the stock performance of 500 American companies) is up 19 percent.

The Wall Street Journal had no trouble finding money managers who were willing to comment positively on the news. Mark Freeman, chief investment officer and portfolio manager at Westwood Holdings Group (which invests $22 billion for its customers), told the Journal:

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Shiller’s CAPE, Harvey, Irma, and now Jose: How Much More is Needed for a Stock Selloff?

This article was published by The McAlvany Intelligence Advisor on Friday, September 8, 2017:

English: (left) and meeting shortly after the ...

Republicans Smoot and Hawley

Wall Street prognosticators have watched Robert Shiller’s CAPE – “cyclically adjusted price-to-earnings” ratio – for years for signs that stocks are becoming overvalued. It’s now at a nosebleed level reached just before the October 1929 crash. The good news is that CAPE has been at that level ever since Shiller said that stocks were overvalued earlier this year. It is not a market timing tool, but more of an early warning indicator.

Short sellers have gotten smashed as the stock market continues to defy gravity. Bets against the SPDR S&P 500 exchange-traded fund, the largest ETF tracking that index, fell to lows in July not seen since May 2013.

But Hurricanes Harvey, Irma, and now possibly Jose may finally bring things back to earth. The jump in unemployment claims for the week ending September 2, caused by Harvey and reported by the Department of Labor (DOL) on Thursday, not surprisingly exceeded economists’ consensus. The increase of 62,000 for the week to

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Jump in Jobless Claims Following Harvey Is Just the Beginning

This article appeared online at TheNewAmerican.com on Thursday, September 7, 2017:

View of the eyewall of Hurricane Katrina taken...

View of the eyewall of Hurricane Katrina taken on August 28, 2005 as the storm made landfall on the United States Gulf Coast.

The jump in unemployment claims for the week ending September 2, as reported by the Department of Labor (DOL) on Thursday, not surprisingly exceeded economists’ consensus of just 241,000. The increase of 62,000 for the week to 298,000 nearly broke a claims record that has been in place for 131 weeks: 300,000.

That record will surely be broken in the weeks to come. The unemployment claims are just beginning to come in, and they are a predictor — a proxy — for job layoffs. Some workers

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Has Janet Yellen Tripped the Bernanke Indicator?

This article was published by The McAlvany Intelligence Advisor on Friday, July 14, 2017:

Official portrait of Federal Reserve Chairman ...

Official portrait of former Federal Reserve Chairman Ben Bernanke

During a question and answer period following her talk at the British Academy in London on June 27, Federal Reserve Chair Janet Yellen was asked if there could possibly be a repeat of the 2007-2008 financial crisis. She answered:

I think the system is much safer and much sounder [today]. We are doing a lot more to try to look for financial stability risks that may not be immediately apparent, but to look in corners of the financial system that are not subject to regulation, outside those areas in order to try to detect threats to financial stability that may be emerging….

 

Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be.

Historians will remember similar assurances from then-Fed Chairman Ben Bernanke just before the real estate crash that led to the financial crisis back in 2007:

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Goldilocks Stock Market Making Forecasters Nervous

This article appeared online at TheNewAmerican.com on Thursday, July 13, 2017:  

At the moment, Wall Street investors are enjoying a “Goldilocks” economy: not so hot that it pushes prices up and not so cold that it causes a recession. Translation: Unemployment is low, wages are rising, interest rates are still near record lows, the gross domestic product (GDP) continues to grow (although not as fast as President Trump would like), and inflation is under control.

It isn’t a perfect world, but to Wall Street investors it’s close.

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More “Fake News?” Trump Behind Wednesday’s Stock Market Dump

This article was published by The McAlvany Intelligence Advisor on Friday, May 19, 2017:

Cover of "The Intelligent Investor: The D...

It’s almost too trite to say that the mainstream media engages in “fake news,” but its nearly unanimous claim that Wednesday’s selloff in stocks was due to Trump’s troubles borders on fake news. It certainly violates a primary rule of logic: post hoc, ergo propter hoc – after this, therefore because of this.

Here is a perfect, but certainly not the only, example. From Marketwatch one learns that “The sell-off came in the wake of a bombshell report in the New York Times that notes from fired FBI Director James Comey revealed President Donald Trump had asked Comey to stop the FBI’s investigation into fired National Security Adviser Michael Flynn’s ties to Russia.”

The tortured logic is this: Trump’s controversies, including those concerning Comey, are going to distract him and his administration from accomplishing many of the policy goals upon which the stock market was banking. Hence, the market will be disappointed.

Other MSM outlets lined up:

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Trump Didn’t Cause Stock Market Decline

This article appeared online at TheNewAmerican.com on Thursday, May 18, 2017:  

According to nearly every major news outlet, Wednesday’s 372-point decline in the Dow Jones Industrial Average was Trump’s fault. CNN Money said “Trump drama rattles market” while CNBC blamed the selloff “on Trump fears.” NPR said the decline was because “Trump remains embroiled in controversy” with CBC News saying it was due to “uncertainty around Trump.”

Precious few deviated from their mission to blame everything on Trump to look at the real reason behind Wednesday’s modest selloff:

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Stock Market’s Complacency Index Highest in 24 Years

This article appeared online at TheNewAmerican.com on Monday, May 8, 2017:  

Wall Street’s “complacency index” — a measure of confidence that stock prices will continue to rise — hit the highest level since 1993 on Monday. Alternatively called the VIX (for volatility index), it is often referred to as Wall Street’s “investor fear gauge.”

Translation: Investors presently appear to have no fear. The index compares investors betting, through their purchases of options, that the market will go up, to those betting to the contrary. When investor fear is high, the VIX will move above 30 or even higher. When fear declines, the VIX trades below 20. During the day on Monday the VIX touched 9.72, a level not seen in 24 years.

So complacent have investors become that the VIX has dropped by 45 percent just since April 13. By comparison,

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann