Dollar Strength Continuing Headwind For Emerging Market Equities

 October 6 2015     David Templeton
Since mid 2011 emerging market equities began to underperform the U.S. equity market (S&P 500 Index). Earlier this year we noted in a post, Emerging Markets Not Out Of The Woods Yet, the headwind a stronger U.S. Dollar can have on emerging market equity performance. The updated chart below continues to show the accelerated strengthening of the Dollar (orange line) and the underperformance of the M...

The Upside of Being Down: Harvesting Tax Losses

 October 6 2015     Anna Pfaehler
When the markets crashed in 2008, my to-do list was a steady stream of rebalancing portfolios. But I wasn’t taking clients out of the markets or drastically reducing their risk (and their chances of a full recovery). I was harvesting tax losses. 

Will The Equity Market Finish The Year In Positive Territory?

 October 3 2015     David Templeton
A portion of the recent equity market volatility can be attributed to the fact a number of factors seem to be at critical turning points. At top of mind seems to be the focus on the timing of the Fed's move to begin increasing/normalizing interest rates. Historically, a tightening of interest rates has led to a slowdown in economic activity. Added to this is the fact corporate profit growth is for...

Bearish Sentiment Is Spreading

 October 2 2015     David Templeton
Since mid March the AAII bullish sentiment reading has been below its long term bullish average. As a contrarian indicator, low levels of bullish investor sentiment typically point to equity markets that are near their bottom. Keeping in mind though, this sentiment reading is most predicative at its extremes. Earlier this week, the AAII bullish reading declined 4 percentage points to 28.1% and the...

Buyback Strategy Continues To Lag Broader Market Return

 October 1 2015     David Templeton
Although S&P Dow Jones Indices reported second quarter 2015 buybacks declined 8.7% versus the first quarter of 2015, the twelve month total increased 3.8% versus the prior twelve month total that ended June 2014. As the below chart shows, this reduction in buybacks on a quarter over quarter basis might be tied to the declining trend developing in as reported earnings (blue line.) In spite of the d...

A Few Positive Equity Market Technicals

 September 26 2015     David Templeton
The equity markets have been anything but kind to investors long stocks. Nearly all the broad market equity indices are in negative territory for the year. The S&P 500 Index: -6.2%, Dow Jones Industrial Average: -8.5%, S&P MidCap Index: -4.4% and the S&P SmallCap Index: -4.6%. Simply reviewing social media comments from investors, one could be lead to believe the market has no where to go but down...

The Fed Is In A Pretty Tight Corner On Future Of Rates

 September 18 2015     David Templeton
So the Fed did not raise rates yesterday. To some this seemed to be a surprise; however, as we noted in our post a few days prior to the announcement we believed global economic factors could play a part in the Fed's rate decision. In fact, Janet Yellen cited issues in markets outside the U.S. as one reason for not moving on rates. Additionally, inflation in the U.S. remains well below the Fed's 2...

Fed Rate Decision More About The Economy Than The Rate Itself

 September 16 2015     David Templeton
Probably the most discussed potential Fed decision on rates is the one forthcoming on Thursday. When it is all said and done, the rate increase in and of itself is really not the issue investors should factor into their investment decision. As we have pointed out in prior posts, higher rates have mostly been a positive for stock returns. A primary issue is the state of the economy, both in the U.S...

A Potentially Weakening Consumer And The Fed's Predicament

 September 12 2015     David Templeton
One aspect of the market's recovery since the financial crisis has been the strength of the consumer discretionary sector. Within the sector itself the retail industry group has outperformed both the S&P 500 Index and the overall discretionary sector itself. This strength could not occur over this long of a period without an improving consumer. The second frame in the below chart, however, shows t...

Bullish Technicals Forming In The Midst Of The Correction

 September 10 2015     David Templeton
As is typically the case when the market is attempting to form a bottom, positive technical signs can be difficult to uncover in the midst of the bearish chatter. This time seems to be no different and the key is whether potentially positive technicals can win out in the face of some weakening fundamental factors.The below chart shows the daily price action for the S&P 500 Index along with several...
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