Sunday, May 1, 2016

Week In Review (4/25 - 4/29)

It was a tough week for stocks as the S&P 500 sold off 1.3% and the tech-heavy NASDAQ lost 2.7%.

The S&P essentially went nowhere from Monday to Wednesday in the build up to the latest announcement out of the FOMC.  Ms. Yellen's statement was more dovish than anticipated and contained no language suggesting that a rate hike would happen in the near future.  Stocks hit their highest point of the week on Wednesday after the announcement but the S&P still only closed up 4 points on the day.

Then Thursday and Friday came and they brought carnage along with them.  The Bank of Japan disappointed investors after it chose to not introduce additional easing efforts.  The market sold off on that news and weakened further on the back of several disappointing earnings reports.  At its low on Friday, the S&P fell into negative territory for the month but ultimately recovered to finish up 27bps for April.

Taking a year-to-date view, the S&P is now up just over 1% in 2016 which is still impressive given the early January and February weakness.

Moving ahead to May, we looked back at the last 20 years and found that the S&P has generally moved higher during the month.  The chart below plots the average and we see that index has finished higher by nearly 40bps over the last 20 May's.

Our friend Steve Deppe of Nerad & Deppe Wealth Management has been putting out some excellent research lately and this week was no different.  In the chart below, Steve offers compelling evidence that suggests the S&P could be headed for a date with its 100-day moving average (currently at 1,995).  We hope you give him a follow on Twitter.

Have a great week.

Ryan Worch is the Managing Director of Worch Capital LLC. Worch Capital LLC is the general partner of a long/short equity strategy that operates with a directional bias and while emphasizing capital preservation at all times.

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