I love reading Wall Street Banks "predictions" at the end of each year, it makes me laugh. For 2018, the banks came out with nice safe predictions for the S&P 500. lets take a close look
With the S&P 500 closing 2017 at 2673.71, we can easily calculate their predictions in %.
Based on the numbers above, Wall Street "Predicts" that we'll see the market goes as high as 12.2%, and as low as -0.81 %, giving us a median of about 5.66%..........
This is what makes me laugh. On one hand, none of the banks are predicting a major correction despite the market being in a bull market for more than 9 years. On the other hand , despite the Trump tax cut, low unemployment , I'm surprised their "predictions" aren't more aggressive. Instead, they play safe.
Here at Passivestor, we stay away from forecasts and predictions, unless we figure out how to build a time machine ? We rather react to market events using simple systematic rules , than predict what the market will do next. This method has been extremely successful for me for more than a decade now. Do not take Wall street predictions too seriously , statistically they are bound to be all wrong.
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2017 was a great year for investor. The S&P 500 has 12 positive monthly gains, which i believe is a first. For me, the story of the year has to be the VIX. on November 3, the VIX slid to its lowest point of all time, and remain under 10 for quite some time throughout the year. Let hope for more volatility in 2018.
The SPY end the year with total return of 21.70 %. Currently, its price remain will above its 200 ma
The number of stocks in the S&P 100 is at 78.84 %, up from 75 %. Remember, anything above 65 % is bullish.
The unemployment rate is 4.10 and below its 12 month moving average, indicating that there's no sigh of recession for the U.S economy.
For the U.S sector, Technology (XLK) remains the best sector to be invested. For 2018 , Im introducing a very simple momentum system to track the best sector to invest. The rules are quite simple. Every month we buy the sector ETF that meets the following criteria:
- CLOSE > 100 days moving average
- SPY > 10 months moving average
- Rank the ETFs based on their quarterly return
The result for this strategy from 2009 are quite remarkable.
We'll track this system through the year and analyze its results later on.
I wish you all the best in 2018, and expect a premium newsletter in February.
What a year 2017 has been. For the very first time, the S&P 500 ended every month with a positive gain. The last time it almost archived that was in 2006 , where 11 out 12 months were positive.
Will this party continue in 2018 ? we'll soon find out.
Interesting month end action in the market. S&P 500 making a new high, Tech stocks getting smashed, Bitcoin surpassing $10,000, there was a lot of action for everyone, let's take a closer look
The SPY remains well above its 200 ma. Its absolute momentum is positive as well
The # of stock in the S&P 100 above their 200 ma is at over 75 %, up 71 % last month.
The spread between the 2 and 10 years bond is still positive. Another good sign that this bull market still has some steam
At the request of one of my readers, I will now include my updates on my recession indicator. As you can see , with low unemployment rate, there's no sign of a recession. Please see this article, for more detail on how this indicator works
Not surprising, Financial are the best sector to be in for December.
The market is continue to be healthy, for how long ? I don't know, I do not own a time machine. Having said that , we remain bullish, Cheers.
The SPY , the ETF tracking the S&P 500 is up another 2.4 % for the month of October. for the year, the SPY is up an impressive 16.83 % .
The SPY continues to trade above its 200 MA and continue to have a positive absolute momentum.
The number of stocks trading above their 200 ma, is at a healthy 71.56 %.
And finally, the spread between the 2 and 10 years bonds remain well above 0. So despite many people predicting a correction, the markets are still traceable and may remain this way for a while.
With Amazon, Google, Netflix, reporting good quarterly results, it's no surprise that Technology is the sector of choice for this month.
Overall , we remain bullish on the market. Cheers