Week in Review (2/23)
by Zach Marsh on Feb 27, 2018
Well, after some encouragement to continue sending our weekly email update I decided not to discontinue :-). Last week I felt that we would be due for a bit of a retracement in the stock market, however when all was said and done, we really didn't go anywhere at all. For the week, the S&P 500 was moderately higher, roughly +0.2%. Developed International and Emerging Market stocks were little changed, as were US small cap stocks. 10 year US Treasury Yield was slightly lower (bond prices higher), as bonds continue to form a base after spending pretty much the entire year in a steady downward trend.
The price action in the stock market this week could be seen as a positive, as every selling attempt was met with buying, however momentum and volume were extremely muted. One interesting item of note is how concentrated market gains have been this year. Netflix, Amazon, Abbvie and Microsoft combined have accounted for nearly all of the gains in the S&P 500 this year. Such low breadth is a concern as the market makes any attempts to move higher.
I continue to believe that bonds have found, at least a temporary bottom here and we should see some higher prices in the coming weeks. Next week will be crucial for short-term stock prices as we sit at an inflection point. I would not be surprised to see a substantial move in either direction, but it is too early to tell. A move above 2750 in the S&P 500 could take stocks back to old highs, but a move below 2700 could lead to a retesting of the lows, so we'll just have to see how it plays out.
As always, the short term noise is generally just that and we remain consistent in our long-term approach to investment earnings, I hope these emails can serve as a means for you to make sense of it all.
Thanks for all your support,
Zach and David