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Week Ahead Ahead Magazine: May 26, 2014

Posted by David Templeton on Monday, May 26, 2014 in Wealth Management | Comments (0)
Several potential market moving economic data points will be released this week. Durable goods orders will be released Tuesday morning, jobless claims Thursday as well as the second revision of first quarter GDP. The GDP announcement will be watched closely as Thursday's report will be the first revision of the advanced reading reported in April when Q1 GDP was reported at .1%. The consensus estimate is for GDP to be revised down to a negative .5%. One important measure used by the National Bure...  Read more...

Week Ahead Magazine: May 18, 2014

Posted by David Templeton on Sunday, May 18, 2014 in Wealth Management | Comments (0)
I suppose last week was an eventful one as the S&P 500 Index reached a new intra-day high on Tuesday of 1902.17. The "century" levels, 1900 in this case, tend to be strong psychological resistance levels for the market and a close above 1900 was not realized.From The Blog of HORAN Capital AdvisorsMost U.S indices ended down on the week from flat to -.6%. The Nasdaq generated a small .5% gain. The economic data continues to be indicative of an economy experiencing slow economic growth. April reta...  Read more...

Labor Market Impact On GDP Growth

Posted by David Templeton on Saturday, May 17, 2014 in Wealth Management | Comments (0)
The Federal Reserve Bank of St. Louis provides a great deal of commentary on a wide range of economic topics. They recently wrote commentary on the significance of labor market data, and importantly, the influence of the employment to population ratio (E/P) on real GDP. The article notes the sub-par GDP level is being influenced by the reduced level of the E/P ratio, a level last reached in the early 1980's. Specifically they note,"...the EP ratio is a key input in a standard growth accounting f...  Read more...

The Dow's Below Average Run To A Record High

Posted by David Templeton on Thursday, May 15, 2014 in Wealth Management | Comments (0)
Earlier this week the Chart of the Day charting service provided information on Dow rallies over the past 114 years. As the below chart shows, the current advance in the Dow lags the average Dow rallies in terms of magnitude and duration. The commentary included with the Chart of the Day graph is as follows."The Dow just made another all-time record high. To provide some further perspective to the current Dow rally, all major market rallies of the last 114 years are plotted on today's chart. Eac...  Read more...

Quality Stocks Serve As A Port In A Storm

Posted by David Templeton on Monday, May 12, 2014 in Wealth Management | Comments (0)
One favorable aspect to the highest-quality companies/stocks is they tend to fall less in down equity markets. If an investor then structures their portfolio to loss less when the market does correct, the return needed in a subsequent market rebound is smaller if the loss is smaller. Over a complete market cycle then, if one losses less and stays in the game on the upside, they will tend to outperform the overall market. Incurring significant losses in down markets is what does the most damage t...  Read more...

Week Ahead Magazine: May 11, 2014

Posted by David Templeton on Sunday, May 11, 2014 in Wealth Management | Comments (0)
Except for the .4% gain in the Dow Jones Industrial Average last week, equities ended the week on a mostly negative note. The market continues to have a heightened focus on the so-called internal rotation taking place among specific equity sectors and stocks. The weaker areas of the market have been in small cap stocks, down 4.8% this year and the specific momentum segments: biotech, social media and technology stocks. Some market moving economic data will be released this week, retail sales, CP...  Read more...
At the end of February the year to date performance for the dividend payers in the S&P 500 Index significantly trailed the performance of the non-payers by a large 673 basis points. Two months later, the end of April, the year to date average return of the payers now exceeds the non-payers by 66 basis points. Much has been written about the bubble bursting in some of the momentum names, like Amazon (AMZN) down 26.7% YTD, Verisign (VRSN) down 19.8% YTD and Yahoo (YHOO) down 16.5% YTD, all non-div...  Read more...

Bullish Sentiment May Be Indicating Oversold Equity Market

Posted by David Templeton on Saturday, May 10, 2014 in Wealth Management | Comments (0)
This past week's Sentiment Survey report by the Association of Individual Investors shows individual investor bullish sentiment declined further to 28.34% from the prior week's level of 29.77%. The weekly sentiment readings tend to be volatile and looking at the 8-period moving average shows the average sentiment reading is 31.5%, still a low level. Many of the survey participants indicated a neutral view on the market as the neutral reading was reported at 42.99%. The last time the neutral read...  Read more...

An Alternative To Selling In May

Posted by David Templeton on Sunday, May 04, 2014 in Wealth Management | Comments (0)
An alternative to selling in May is to focus on lower beta high quality stocks whose performance has lagged the lower quality issues over the past twelve months. In a recent report by S&P Capital IQ, Quality and Stability, S&P notes the lower quality issues in the S&P 500 Index have outperformed the higher quality ones. In the report S&P summarizes the quality breakdown as of April 17, 2014:...there were 443 companies the S&P 500 that had an S&P Quality Rank, with 128 (29%) having ranks of A-, A...  Read more...

Week Ahead Magazine: May 4, 2014

Posted by David Templeton on Sunday, May 04, 2014 in Wealth Management | Comments (0)
The equity market continues to be stuck in a trading range that has generated nearly flat returns on a year to date basis. Although most U.S. market indices were higher last week, YTD returns are muted: S&P 500 Index (1.8%), Dow Jones Industrial Average (-.4%), Russell 2000 (-3.0%). This past week the apparently strong employment report indicated the unemployment rate declined 40 basis points to 6.3%. A significant negative in this report is the decline in the rate was primarily a result of the ...  Read more...
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