Third time's a charm for S&P 500

By Justin Turner CIM, DMS®, CFP®
After two previous failed attempts at breaking the 1900 mark, the S&P 500 finally made it through on its third attempt and has continued to drift higher since.  The index seems destined to challenge the 2000 mark before the year is out, but it would not be surprising to see this 'big, round number' be a difficult level to surpass, and could possibly bring a period of sideways markets if not an outright correction.  Investors tend to be cautious when stocks, currencies and indices approach big, round numbers and it usually takes not only a lot of buying but repeated attempts to finally break through these psychologically important levels.

Canadian markets have cooled off a bit lately, and the market has been behaving like it's 2013. Whether or not this becomes a continuing trend remains to be seen.  The TSX has a big, round number of its own to contend with and if it wants to keep pace with the US markets it will need to break through the 15,000 level sometime in the near future.

S&P 500 reaches 1900 but quickly falls back

By Justin Turner CIM, DMS®, CFP®

US markets made new highs but then sold off leaving many questioning whether a bigger correction could finally be in order.  Surprisingly though the market reversed course on Friday and finished strong.  Unfortunately Canadian Markets did not participate much in the rebound and finished the week with a slight loss.  Much of the volatile week can most likely be attributed to the 10 year US Treasury rate dipping below 2.50% for the first time in quite a while, which combined with some of the strong economic data has left analysts scratching their heads.  This has investor’s worried as a falling 10 Year rate generally points toward weaker expectations for the economy and for inflation and contradicts the economic data we have seen lately.

Perhaps this is just another head-fake and the S&P 500 will test 1900 once again in the very near future. Whichever way the market moves to start the week could be a strong indication of where we are headed next.

Sell in May and go away?

By Justin Turner CIM, DMS®, CFP®

I am back from my vacation, and looking at the charts it appears I didn’t miss much, with the TSX being almost exactly where it was when I left.

May has historically been the start of a period of weaker stock market performance, and considering the run up in stock prices we have seen over the last few years now would be as good a time as any for May to once again signal the beginning of weaker markets. Equities have indeed started the month of May slow, slightly down for the most part.  However, at this point there hasn't been anything to indicate that a major sell-off is looming as gold has been flat even with the issues in Ukraine, and market volatility as measured by the VIX has also been low so it appears to be business as usual for the time being. Nevertheless, it does feel that the market is at least taking a breather which in the grand scheme of things is probably healthy. 

Here in Canada, energy related names have been hit hard over the past week and it remains to be seen whether this signals not only the end of the sector’s outperformance but perhaps even the end of Canada’s outperformance compared to US markets that we have been enjoying thus far in 2014.  Small corrections are generally healthy as they tend to attract new buyers which will help fuel the next rally, so as long as things don’t get out of hand Canadian markets could continue to outperform throughout the year.