Market Monitors
Each week I review many market monitors including earnings, economy, politics, charts, valuations and central banks. Last week however we added geopolitics. I quoted Andy Freidman a few weeks ago who gave meaning to Poly Tics (Many Ticks), and now geo meaning “earth” becomes “many blood sucking pests around the world”.
A lot of sabre rattling in the press last week, with media outlets bringing in every retired general to add on to the President’s comments. As you know, threats from North Korea are not new, what’s new is that it got a reaction from Washington.
So, let’s look at what happens during times of conflict. Our Technical Strategist Mike Gibbs held a call last week going through the results of conflicts dating back to the Cuban Missile Crisis and he stated that “these times have historically provided the best buying opportunities”. He goes on to say he believes that if it stays with rhetoric that the markets won’t do much of anything. If a conflict starts that the markets may move downwards, but will be relatively short term. Most major downturns having more than one reason that piled on to force the market lower, such as Savings & Loan, real estate crisis etc.
That said, I feel there are no other catalysts that are negative right now. Earnings continue to grow, technical backdrop looks good, global economy is positive, and in my opinion, there is no better place to go with cash than equities. On the earnings note, with 84% of S&P 500 companies reporting through last week 72% of companies beat on earnings, 70% beat on sales and Q2 earnings are on track to be 10% above the same quarter last year according to FactSet.
The buy/sell for this week is still hovering right around the sell line. We still feel dips below the mean should be bought.
Source: MG&A
As always should you have any questions please don’t hesitate to call.
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