September has historically been the worst month of the year for stocks (LPL Financial), and this year was no different as the S&P 500 closed the month down almost 4%. (YCharts) Despite recent weakness the stock market has shown amazing resilience as the S&P 500 is about 4% higher year-to-date, rallying 50% from the lows in March. (YCharts)

COVID-19 has undoubtedly been the biggest factor impacting the economy and stock market this year, and will likely continue to be the most important item to watch as we enter the fourth quarter and move into 2021. Amidst the backdrop of a global pandemic the economy has steadily improved over the last few months.  The improvement in economic data, combined with the latest market pull-back, has led us to increase our stock market exposure. 

We recently downgraded our Market Breadth indicator to Yellow. While the S&P 500 reached all-time highs in recent weeks, there has been less participation from stocks in the most recent move higher, signaling near-term caution.

With the presidential election less than 3 months away, we know the election is on your mind; it’s on ours too. Here, we will share with you our thoughts on the election’s potential impact on the economy and the stock market. 

We upgraded our Business Confidence Indicator to green. 

Stocks continued their move higher last month as the S&P 500 rallied over 5% in July. (YCharts) This brings the S&P 500 to breakeven for the year, something that many investors would have had a hard time imagining during the market lows in March.  While the rally in stocks is much welcomed there is concern that the market’s recovery does not accurately reflect the damage done in the economy.  We agree.  While the market is generally considered a leading indicator, we don’t believe the dramatic move higher is an “all-clear” signal for stocks (or the economy).

We recently updated our economic dashboard by upgrading our Market Technicals indicator to green. The sustained move higher in stocks since the lows in March has shifted the underlying trend back to positive leading to this change.

June has come to a close and with that we leave behind a very eventful 1^st half of 2020.  Most of us probably wish we could fast forward into 2021 as the pandemic has been felt by all in one way or another.

We upgraded our business confidence indicator to yellow. 

Every year we look forward to connecting with our clients and their families at the Holiday Brunch in December.  Unfortunately, given the growing concerns around COVID-19 our venue has made the difficult decision to cancel all large events, including ours. 

We have determined that rather than try to reschedule we will be canceling the event for 2020 given the ongoing uncertainty around coronavirus, potential risk of a second wave, and challenges finding a suitable venue.  While this was a tough call to make our priority is the health and safety of all of our clients, families, and employees.  We remain committed to keep the tradition going in the future and we look forward to celebrating it with you in 2021!

Sincerely Enzo T. Pellegrino and your Team at TLWM 

We recently updated two indicators on our economic dashboard: Market Breadth and Market Sentiment.