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The Bull Thread

Discussion in 'Stock Market Today' started by bigbear0083, Apr 1, 2016.

  1. bigbear0083

    bigbear0083 Content Manager
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    Why Stocks Can Predict The Next President

    Although the fight against COVID-19 continues to dominate the headlines and our thoughts are with those affected, this is an election year and as we get closer to November it will begin to garner more attention. Next week in our Weekly Market Commentary, we will discuss the election in more detail, but today we wanted to share a very interesting connection between the stock market and election.

    Turns out, since 1928, the stock market has accurately predicted the winner of the election 87% of the time and every single year since 1984. It is quite simple. When the S&P 500 Index has been higher the three months before the election, the incumbent party usually won, while when stocks were lower, the incumbent party usually lost.

    “Think about it; no one expected Hillary Clinton to lose back in 2016, no one except the stock market that is,” explained LPL Financial Senior Market Strategist Ryan Detrick. “The Dow had a 9-day losing streak directly ahead of the election, while copper (more of a President Trump infrastructure play) was up a record 14 days in a row, setting the stage for the change in party leadership in the White House.”

    As shown in the LPL Chart of the Day, as we get closer to the election, how stocks are doing could signal who might win in November.

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  2. bigbear0083

    bigbear0083 Content Manager
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    Labor Market Continues Its Momentum

    Following the massive beat in May nonfarm payrolls, many wondered if last month’s job gains pulled forward hiring ahead of the expiration of the Paycheck Protection Program to ensure small business loans were forgivable. Recall that the US labor market added 2.5 million jobs in May (revised up to 2.7 million in the June report) versus Bloomberg consensus expectations for a loss of 7.5 million jobs.

    The June report helped put those concerns to rest, as the US economy added 4.8 million jobs, surpassing Bloomberg’s median consensus estimate of 3.2 million. As shown in the LPL Chart of the Day, nonfarm payrolls have been on a wild ride in 2020:

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    However, despite surpassing expectations in the headline numbers, the June report also revealed that permanent job losses continue to tick higher. “Job growth remains the key to the economic recovery,” added LPL Chief Investment Officer Burt White. “The pandemic has been a major shock to the labor market that will take time to heal, but the solid job gains over the past two months suggest the recovery is well on its way and the recession may already be over.”

    The unemployment rate dropped more than two points to 11.1% versus consensus of 12.5%, while misclassifications around the “absent from work but employed” issue would add only one point (compared with three points last month). Although the June report was a much smaller upside surprise than last month’s shocker, the job market is clearly coming back stronger than most economists expected.
     
  3. bigbear0083

    bigbear0083 Content Manager
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    Does a Weak First Six Months Mean Trouble?

    The wild ride of 2020 continues, with the S&P 500 Index down 20% in the first quarter and up 20% in the second quarter. Much like dropping a 20 dollar bill and picking it up, this doesn’t mean you are 20 dollars wealthier. Down 20% and then up 20% actually comes out to a 4% drop for the first half of the year.

    What does a negative first half of the year tell us? Turns out, gains could be hard to come by the second half of this year. “Although 2020 is like nothing we’ve seen before, the fact of the matter is a weak first half of the year could mean weaker than normal returns for the rest of the year,” according to LPL Financial Senior Market Strategist Ryan Detrick.

    In fact, the S&P 500 had been higher in the first six months of the year a record nine consecutive years before being lower in 2020. Since 1950, there were 48 times when the first six months were higher and the rest of the year gained 77% of the time and added 5.8% on average those final six months. Compare that with when the first six months of the year were lower 21 times, the final six months were higher only 52% of the time and up only 1.2% on average.

    As shown in the LPL Chart of the Day, a move higher is quite likely after strength in the first six months of the year, while very modest gains could be in the cards if those first six months underwhelm.

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  4. bigbear0083

    bigbear0083 Content Manager
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    Bullish Sentiment Stops Sliding
    Thu, Jul 9, 2020

    While the past week's gains are mostly being erased today, for the most part, the S&P 500 has been trading firmly higher which has lifted sentiment. AAII's weekly reading on bullish sentiment was lifted as a result, rising from 22.15% to 27.16%. That is the highest level of bullish sentiment since June 11th, and the 5 percentage point week over week increase was the biggest jump since the end of May. Not only was it the largest single-week increase in over a month, but this week snapped a four-week long streak in which bullish sentiment has declined. With the streak now over, it was the longest streak of consecutive declines in bullish sentiment since April of 2018 when sentiment also fell for four weeks. While higher this week, bullish sentiment is still below its historical average of 38% by at least one standard deviation as it has been for four straight weeks now. That is the first such streak since August of last year.

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    Meanwhile, bearish sentiment has come back down reaching 42.67%. Mirroring bullish sentiment, that is the lowest reading for bearish sentiment since June 11th, but it remains above its historical average by at least one standard deviation as has been the case for the past four weeks.

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    Bearish sentiment was not the only one to fall this week. Neutral sentiment also slightly pulled back falling to 30.17% from 31.96%. Although lower this week, neutral sentiment is still at a much more normal reading than the past few months' extreme lows. In fact, this week marked the first time that neutral sentiment was above 30% for back to back weeks since February.

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