September’s normal seasonal weakness was on display again this year as stocks pulled back during the month.  The S&P 500 closed the 3^rd quarter roughly where we started, but is still up almost 15% this year. (YCharts)

While most investors enjoy seeing this type of strength in stocks, it can raise questions about what the future may hold, specifically: whether stocks can continue to move higher.  This was a concern we heard frequently in the beginning of this year.  Performance has been strong since then, but we wouldn’t be surprised to see some market volatility as we’ve had very little this year and volatility is a normal and healthy part of a growing market.

August was another steady month for stocks with the S&P 500 closing higher for the 7th month in a row and finishing up about 3%. (YCharts) The S&P 500 doubled from the Covid bottom in March of 2020, we consider this a major milestone as this is the fastest the S&P 500 has rallied 100% from the market lows since World War II. (LPL Financial)

July began with stocks moving higher as the S&P 500 once again hit all-time highs. (YCharts) Those new highs gave way to some stock market volatility as stocks pulled back throughout the month before finishing up about 2.3%. 

We recently made two updates to our economic dashboard:  upgrading our market sentiment indicator to green and downgrading our market breadth indicator to yellow. Overall, we believe that our economic dashboard continues to suggest a low probability of recession over the next 6-9 months.

As June comes to a close, it’s hard to believe we are already halfway through the year; although, a lot has changed since January 1st.  It is wonderful to be back in the office with the full team and to be able to meet with many of you face-to-face once again. 

Last month we suggested that the chance for some stock market volatility had increased as our market sentiment indicator was flashing a warning sign. While May started out strong, we saw some volatility as the market pulled back in the middle of the month before bouncing back and finishing the month roughly where we started (YCharts).

We recently upgraded our Market Sentiment indicator to yellow from red.

The stock market’s strong momentum continued in April as stocks once again rallied to new all-time highs.  For the month, the S&P 500 was up about 5%, which now puts the index up over 11% for the year. (YCharts)

We recently upgraded our LEI indicator, the Conference Board Leading Economic Index, on our economic dashboard.

We recently downgraded our Market Sentiment indicator from yellow to red as we see signs that investors may be feeling overly optimistic about the market.