Last week I mentioned that the markets reminded me of the "carrot and stick" metaphor, and that hopefully we would breakout above that 3386 resistance line and allow us to get that carrot. Well that became a reality on Tuesday when the S&P 500 closed at a new record high of 3389. With that record, high coronavirus losses were wiped out and ended Wall Street\'s shortest bear market/bull market rebound cycle. Historical data shows this bear/bull cycle typically lasts 1,542 days or more than four years. This cycle lasted only 181 days/6 months with 33 days on the downside and another 148 to recover. On Wednesday, Apple became the first U.S. company to reach a $2 trillion market cap, doubling in valuation in two years and 60% in 2020. On Friday existing home sales increased 24.7% in July, recording the strongest monthly gain in the history of the survey going back to 1968. And finally, to top it all off, the S&P 500 set another new record high of 3397 at week’s end. This morning as I’m drafting this update, I came across a CNBC story that states “While the overall market crashed and then reached new heights between its previous high on Feb. 19 and new high on Aug. 18, only 38% of stocks in the (S&P 500) index made gains over that time period. A majority, the remaining 62%, were negative.” This was primarily due to the fact that the major indices are market cap weighted, so Mega Tech companies like Apple are the primary drivers in the S&P 500 (refer to 11 July update). You can then look at this two ways. If you have a “glass half empty” perspective, you can have concern that this rebound is not broad across all sectors. However, I tend to have the “glass half full” perspective with that 62% negative category. Hopefully those sectors will soon be crossing their own resistance lines and moving to their own record highs. For TSP TIPS, the C fund hit a new record high on Friday, putting it in that 38% sector. The S fund falls into that 62% sector, but is just two percent shy of setting its own record high. As such, we’ll stay with our current allocation. Finally, the carrot tasted good…….
Last week I mentioned that the markets reminded me of the "carrot and stick" metaphor, and that hopefully we would breakout above that 3386 resistance line and allow us to get that carrot. Well that became a reality on Tuesday when the S&P 500 closed at a new record high of 3389. With that record, high coronavirus losses were wiped out and ended Wall Street\'s shortest bear market/bull market rebound cycle. Historical data shows this bear/bull cycle typically lasts 1,542 days or more than four years. This cycle lasted only 181 days/6 months with 33 days on the downside and another 148 to recover. On Wednesday, Apple became the first U.S. company to reach a $2 trillion market cap, doubling in valuation in two years and 60% in 2020. On Friday existing home sales increased 24.7% in July, recording the strongest monthly gain in the history of the survey going back to 1968. And finally, to top it all off, the S&P 500 set another new record high of 3397 at week’s end. This morning as I’m drafting this update, I came across a CNBC story that states “While the overall market crashed and then reached new heights between its previous high on Feb. 19 and new high on Aug. 18, only 38% of stocks in the (S&P 500) index made gains over that time period. A majority, the remaining 62%, were negative.” This was primarily due to the fact that the major indices are market cap weighted, so Mega Tech companies like Apple are the primary drivers in the S&P 500 (refer to 11 July update). You can then look at this two ways. If you have a “glass half empty” perspective, you can have concern that this rebound is not broad across all sectors. However, I tend to have the “glass half full” perspective with that 62% negative category. Hopefully those sectors will soon be crossing their own resistance lines and moving to their own record highs. For TSP TIPS, the C fund hit a new record high on Friday, putting it in that 38% sector. The S fund falls into that 62% sector, but is just two percent shy of setting its own record high. As such, we’ll stay with our current allocation. Finally, the carrot tasted good…….