Research Report Excerpt #1 Heading into 2022, we understood that the historic potential S&P 500 returns surrounding midterm cycles and Year 2 of Presidential cycles usually deliver higher volatility and lesser returns. There were no guarantees that history would repeat, but the seasonal cycles suggested that a strongly profitable 2021 should reinforce year-end rebalancing ahead…
Research Report Excerpt #1 As detailed since late last year, this is the S&P 500’s fourth longest run without a 10% pullback (~22 months vs. ~1 per year). Since 1980, the S&P 500 has averaged a 14% drawdown annually. As of Friday’s close, the S&P 500 has traveled 460 trading days without a 10% correction…
Research Report Excerpt #1 The data remains our guidepost (S&P 500 forward returns after falling below 200-DMA above table), which was a message also highlighted in Fed chairman Jerome Powell’s press conference this past week. So I ask of you, “If the Fed remains data-dependent, then why shouldn’t you? Furthermore, if much of the pessimism around…
Research Report Excerpt #1 In order for drawdowns to not become realized losses, sometimes we also have to elongate our time frame. You’ll find that to be the case when markets come under pressure, as they have in 2022. This is obviously not a new concept, but a concept that many traders and investors haven’t…
Fed Funds Rate History The charts below show the targeted fed funds rate changes since 1971. The Federal Open Market Committee (FOMC) didn’t announce its target interest rate after meetings until October 1979. The Fed adjusted the rate through its open market operations. Banks were forced to guess what the rates would be as a result. The Fed…
Research Report Excerpt #1 It’s important to respect seasonal patterns/data, but the seasonal data is often best utilized when pared with other quantitative studies/data. When it comes to the January Barometer, this may be especially true. The catch is the January Barometer has been broken lately. In fact, a lower January for the S&P 500 has been bullish…
For those who have never experienced a bear market before, welcome to the worst of times! Know that for every bear market there is only the probability of a positive outcome, the inevitable resumption of a bull market. This is an elaborate way of exploring the idea that “it always gets better”. From time-to-time, conditions…
Research Report Excerpt #1 Nonetheless, some variables provide greater force and as such are characterized as force factors. I’m of the opinion, the force factor of the day is monetary policy, the Fed (FOMC). The tweet stream above from St. Louis Fed President James Bullard Friday identifies his commentary shortly after the release of the November Nonfarm Payroll report. James Bullard…
Research Report Excerpt #1 Given that in the lead up to “Volmageddon” in 2018 we got up to 9 days of VIX/SPX rising together, most investors who remember this automatically assign a like-outcome, even though there were a great many more issues that combined to produce Volmageddon. Additionally, while the recent positive relationship does raise cautionary flags,…
Research Report Excerpt #1 Since 1928, a great many things have changed in our lives, in the economy, and around the world. There have been many economic shocks, World Wars, epidemics, advances in technology, and the list goes on and on. The point here is: No matter what you may think can or will trip…
