Weekly Recap 8/3/2018: Market Review
by Zach Marsh on Aug 3, 2018
S&P 500 +0.76%
10 Year Treasury +0.14%
Weekly Update: Market Review
As we push through the dog days of summer, the market continues to grind higher. The market remains trapped in the range it set in the first two months of the year. S&P 500 highs were set on January 26th and the lows were made on February 9th. In early April, the market retested the February lows and since that time it has been on a steady, methodical climb back towards the top.
What will happen if and when it reaches the old highs remains anyone’s guess. One thing seems clear, this market remains resilient. Back in 2016, the market used every geopolitical quake as a buying opportunity, whether it was Brexit, the Trump election, or the Italian government collapse. Each political event was marked by a swift sell-off followed by and even swifter rally. We have seen similarities this year with all the trade war banter. Each time President Trump threatens greater tariffs, or the Chinese or Europeans counter his threats, the market responds by opening lower and then rallying back throughout the day. Yesterday we saw the most recent example of this market action. What this seems to be telling us is that the bull market remains intact.
The market tide will eventually turn, but there is no profit in trying to guess the top, even notable short sellers will advise against selling into strength. I disagree with the adage that a market correction is 10% and a bear market is 20% or greater. The depth of the drop is less important that the actual length of the decline. A bear market’s double-edged sword is the decline in asset value coupled with the loss of time. Therefore, we don’t have to be as concerned with predicting the timing of the trend shift, only concerned about recognizing it, and taking advantage of it when it is happening. Whether we are nine years into a bull market or two years into one, in order to stay in rhythm it is always important to listen to the changing of the music’s tempo. For now, the beat remains the same. Tomorrow who knows?
Thanks for reading,
Zach and Dave
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