Since the beginning of the year, markets have screamed ahead leaving many to wonder how long it can continue at this pace. Did a warning sign make itself apparent last week?
Year to date (YTD) through June 9th the S&P 500 has grown by 8.62%. First quarter earnings were strong, supporting current growth. Also, much can be made of the hope for fiscal stimulus. At the current pace of growth, 2017 would end up at 19.49%!
To be realistic, markets WILL NOT sustain the current pace of growth! The year will bring news that will increase and decrease volatility changing our current pace. The question is, as always, “What directions are we going in next?”
There is a troubling sign that may signal the beginning of the end of a rally. Year to date technology stocks have grown substantially. They have shown valuation strength in the face of meager prospects of future growth. This past week, Technology took a major step back. Through June 2nd, the YTD performance of the NASDAQ was 17.14%. Through June 9th, YTD performance was 15.32%. Across the week the index shed 1.82%. What this does not show, is that it was all lost on one day… Friday. With the weak cause for its recent rise, this may be a sign of wavering investor confidence. Now, will it spread to the rest of the market?
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Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long term holding strategy is the best strategy in any market environment.
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