Market-at-a-Glance

Market-at-a-Glance - 5/28/2020

By: Christopher Mistal

May 28, 2020

Fundamental: Vague. The market has recovered nicely over the past two months, but valuations are now getting rather elevated even when using the most optimistic of earnings estimates. Reopening is underway in many parts of the country, but jobless claims are still accumulating at an unprecedented pace. U.S. GDP for the second quarter is estimated to be –40.4 by the Atlanta Fed’s GDPNow model as of today. And that is actually an improvement over the previous estimate.

Technical: Overextended? NASDAQ is back in the green year-to-date. S&P 500 is not all that far behind having reclaimed its 200-day moving average this week, but DJIA is lagging still unable to clear its 200-day moving average. However, even lagging DJIA has rebounded enough to satisfy the criteria for a new cyclical bull market. The surge higher has many technical indicators stretched to the upside and at some point, a pause and/or pullback is likely.

Monetary: 0 – 0.25%. The Fed’s next scheduled meeting is June 9-10. As long as the market continues to log gains, don’t expect to hear much from Fed officials. They are quite busy buying hefty amounts of Treasuries, MBS and commercial paper. And if the market does weaken expect to hear there is still more that can be done by the Fed. It may be wise to remember “not to fight the Fed.”

Seasonal: Neutral. June is the last month of NASDAQ’s “Best Eight Months.” DJIA and S&P 500 “Best Six Months” has already ended. NASDAQ’s Seasonal MACD Sell Signal can trigger as soon as the close on June 1. An email Alert will be sent when it triggers. June has performed better in Election Years, second best S&P 500 month, #5 DJIA, #4 NASDAQ and Russell 2000.

Psychological: Neutral. According to Investor’s Intelligence Advisors Sentiment survey Bullish advisors are up to 50.5%. Correction advisors stand at 25.7% while Bearish advisors have slipped to 23.8%. At these levels the scales are essentially balanced. As long as the gradual reopening of the economy across the country stays on track with few or no setbacks, the bulls will likely maintain the upper hand and reap the benefits of being long. However, if things do not go smoothly, then the opposite is quite likely.