Everyday, Everyday I Have the Blues
By John Stoltzfus,
Chief Investment Strategist
Trend Analysis
Market Strategy Radar Screen Weekly - November 24, 2014
In this article:
- Market Analysis
- S&P 500
- Asset Allocation
Initiating our 2015 Year-End Target for the S&P 500
A Thanksgiving Holiday Reader
Last Friday, November 21st, the S&P 500 delivered its 45th record high of 2014. The move was broadly attributed to moves by the European Central Bank and Chinese authorities to provide economic stimulus, but we’d also add a good earnings season and broadly solid economic data stateside.
We believe the market has showed us where it wants to go from the bottoms established on February 3rd in the first half of the year and on October 15 in the second half: and that is higher and with a bias towards cyclical growth.
That said, the recent return of low volatility as measured by the VIX tells us that investors prone to worry could benefit from buying “insurance” via options on the VIX near term and into the start of the New Year.
Beyond a near-term concern that momentum may be driving the market higher to the end of the year as window dressing, tax selling, profit taking and sector rotation rule the day, we remain constructive on equities.
On November 19th of 2013 we felt somewhat similarly as we initiated a target of “2014 in 2014” which worked out okay as the market sailed through that year-end target two months early on October 31st of this year. Trick or Treat Indeed!
Looking back on the past 11 months, investors might well select “We worked hard for the money” as a theme song considering what we had to get through from the start of the
year to where we closed last Friday.
In our view, 2014 has been a year fraught with risk and opportunity. Headline risk has arisen from the geopolitical, weather and Ebola and opportunity has come from improving economic data, corporate earnings, and innovation in a not unchallenged environment.
