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Inside The Stock Market ...trends, cross-currents, and outlook

Mar 07 2023

Bulls, Bears, And Boxing

  • Mar 7, 2023

Bears normally walk on all fours, just like their congenitally happier counterparts. But images we see of bears attacking prey (or humans) usually show them on two feet. Maybe there’s a lesson there.

Mar 07 2023

In The “Eye” Of The Beholder

  • Mar 7, 2023

Stocks could trade higher in the next few months as CPI numbers enjoy easy year-to-year comparisons, prompting a more soothing tone in daily Fed-speak. Then again, the lagged impact of the last year’s rate hikes and balance-sheet shrinkage has yet to materialize, meaning we’re likely in the eye of the storm.

Mar 07 2023

Inadvertent Easing?

  • Mar 7, 2023

Sometimes, a sharp upside reversal in the stock market will correctly anticipate future improvement in monetary and liquidity conditions. That was the case with the powerful up-leg that sprang from the market’s 2018 Christmas Eve bottom.

Mar 07 2023

Why NASDAQ’s Gains Are A Disappointment

  • Mar 7, 2023

The run-up in Tech and the NASDAQ has been impressive, but their relative strength in recent months might be considered substandard from a “cyclically-adjusted” perspective.

Mar 07 2023

A Real Stumper

  • Mar 7, 2023

The equally-weighted Value Line Geometric Index has generated a 32.4% annualized price gain during the best six months of the presidential election cycle, measured back to its 1964 inception. In the other 42 months of the cycle, the index produced a -0.7% average annualized return.

Mar 07 2023

Rose-Colored Remembrances

  • Mar 7, 2023

Monetary conditions have worsened, recession evidence is piling up, and some of our Large Cap valuation measures have returned to their tenth historical deciles. However, with the economy near full employment we thought it worth revisiting the past to find examples where the market might have temporarily thrived under similar circumstances.

Mar 07 2023

CBO: The Ministry Of Misinformation?

  • Mar 7, 2023

After failing to publish an estimate for the GDP Output Gap for nine months, the Congressional Budget Office has just decreed that the economy has yet to reach its full-employment potential!

Mar 07 2023

The Late-2022 Recession That Wasn’t

  • Mar 7, 2023

Our Treasury Secretary (and former Fed Chair) has described the JOLT survey (Job Openings and Labor Turnover) as her favorite labor market indicator. We don’t know why: It’s a good survey, but similar figures become available about two months in advance of JOLT.

Mar 07 2023

The Yield Curve Meets Microsoft Excel

  • Mar 7, 2023

To our surprise, the measure that most closely correlated with real-GDP growth on a one-year time horizon is the rarely mentioned Treasury spread for the 5-Yr./3-Mo.

Mar 07 2023

Meanwhile, In “Relative World”...

  • Mar 7, 2023

A large swath of the institutional asset-allocation world is engaged in the sometimes dangerous, binary game of “stocks versus bonds.” Although the 2022 bond debacle caused relatively mild damage to a massively overweight equity position, the bear markets of 2000-2002 and 2007-2009 produced losses for stocks versus bonds that exceeded 60%. 

Mar 07 2023

Might VLT Be Out Of Step?

  • Mar 7, 2023

Unless the S&P 500 and NASDAQ correct more than 5% from their March 6th levels by the end of the month, both will trigger new VLT BUYs. Rather than celebrating that prospect, however, we find ourselves wondering what might go wrong.

Mar 07 2023

Small Cap Malaise

  • Mar 7, 2023

Imagine telling a Small Cap investor in mid-2018 that: (1) the U.S. economy would spend all but two months of the next 4-1/2 years in expansionary mode; and (2) M2 money supply would increase by 50% in that time, and yet the Russell 2000 would gain a grand total of just 9% over the same span.

Mar 07 2023

Not Quite In Sync

  • Mar 7, 2023

At nearly 4-1/2 months, the stock market rally has reached an age where the Technical confirmation should be overwhelming if the upswing is in fact the first phase of a “new” bull. That’s not what we observe, however.

Mar 07 2023

Times Are Still Tough For “Timing”

  • Mar 7, 2023

YTD, passive strategies are again ahead of most attempts at timing, though we still believe that asset allocation success over the next several years will require much more use of the latter.

Feb 07 2023

No Punch Bowl? No Problem!

  • Feb 7, 2023

Stocks are off to a strong start in 2023, and speculative juices are again flowing. In the final week of January, NASDAQ trading volumes were eight times those of the NYSE, a level seen only at the very peak of the meme-stock mania in early 2021. (Pre-COVID, the ratio oscillated between two and three. It’s a brave, new world.)

Feb 07 2023

Irrationality Is Back, Right On Schedule

  • Feb 7, 2023

The hostile monetary backdrop makes recent stock market exuberance even more irrational than in early 2021. Yet, this is the middle of a seasonal window that historically boasts an elevated level of craziness: It is the year preceding a presidential election—a time when monetary and fiscal stimulus are ramped up. 

Feb 07 2023

Another Thrust, Right On Schedule

  • Feb 7, 2023

Among the latest bullish cues, we’d put the most weight on the MBI breadth-thrust signal because it’s the only one among a variety of measures we track that hasn’t falsely triggered during a bear market. Perhaps its first misfire is imminent. 

Feb 07 2023

The Economy Rallied In January, Too

  • Feb 7, 2023

The narrative for January’s strong stock market bounce is that not all key economic releases looked to be forecasting a recession. However, one must consider that this was only true for coincident and lagging data series.

Feb 07 2023

Is Good News Ultimately “Bad News?”

  • Feb 7, 2023

Let’s momentarily imagine that both the Index of Leading Economic Indicators and the yield curve “fail,” and a recession in 2023 is sidestepped. What might the GDP growth outlook be in that scenario? It wouldn’t be good, and (ironically) that’s because of strong labor market conditions on which the economic bulls now rest their case!

Feb 07 2023

1966-67: When The Yield Curve “Failed”

  • Feb 7, 2023

Given the tendency of economists and strategists to dismiss the message of an inverted yield curve, it’s surprising there’s been no scrutiny of the “dog that didn’t bark”—the inversion of 1966. That’s the last time an inverted curve did not lead to a recession.