Summer Stall: Waiting

Summer stall parked the stock market. This started mid-April, on Tax Day. We spoke of this coming in our April 9 podcast, “Volatility for Traders = Opportunity for Investors.” And we spoke of this in our April 12 Market Update, “New ATHs — Throttling it Back.” And here it is…

Choppy

Broadly speaking, most stocks had no issue with last week’s disappointing news in April jobs. Both the Dow and S&P 500 made record highs Friday morning. The tech-heavy Nasdaq lagged the overall market for another week. And the growth-at-any-price, high-multiple tech shares sold off on the continued inflation-worry of markets. Moreover, hints of higher rates from Treasury Secretary Yellen helped cyclicals and commodities. And that hurt growth stocks.

Summer stall, part of longer choppy

You will most likely be hearing the missive “sell in May and go away” soon across most TV financial channels. While it is a catchy phrase, it is historically inaccurate. Historically speaking, “Sell Tax Day, and go away” would be a better phrase. This is because an investor could do so and miss nothing “net” but a lot of frustrating up and down during the 2–3 months leading into the July 4 weekend.choppy market while waiting during summer stall

Commodities and inflation during summer stall

Soaring commodities and associated inflation pressures currently concern the markets. And this is a normally choppy period of post second-quarter earnings. Investors should eventually see signs of a calmer and slower pace of recovery as good news.

The Citi Economic Surprise Index — while remaining positive — continues to hit new 12-month lows. This index has led the upturn in the economy and in stock prices since April of last year.

Looking ahead, beyond summer stall

Since OHFG expects a very-strong second half of this year, our investment team is being selective in our investments — looking for opportunities into H2 2021 and beyond. We continue to expect a 5%–6% pullback in the S&P 500 during the second quarter — prior to a strong second half of the year.

Resources

Last Fridays Podcast: Stock Talk School: Big Government — Unintended Consequences? Or Intended?

WEEK ENDING 5/7/2021 (CUMULATIVE TOTAL RETURNS)

Total returns for markets, week ending 2021-05-08; Summer stall

Additional resources

  • Find more information and help on our YouTube Channel.
  • Check out these helpful podcasts by Chris Perras, CFA®, here.

 

Weekly market updates contain general information and expresses views of Oak Harvest Investment Services. We believe that data, articles and information cited are reliable at the time of creation, but they are not guaranteed.

All charts, graphs, or similar images have limitations and should not be taken in and of themselves as being able to determine when to buy or sell securities. Nothing in this content is intended as, nor should it be regarded as, personalized investment advice.

No chart, indicator or graph included should be taken, in and of itself, as being able to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you. Views and opinions expressed may change without notice and do not constitute a recommendation, or an offer or solicitation to buy or sell securities.

In addition, Oak Harvest makes no assurance as to the accuracy of any forecast made. Indexes like the S&P 500 are not available for direct investment and your results may differ. Past performance is not indicative of future results. Investing involves the risk of loss.